Asia Summary and Highlights 10 Jan

Asia session

The Japan November Labor Cash Earning has disappointed at 0.2% y/y vs expectation of 1.5% and dropped from 1.5% in October. This is a key metric as BoJ is focusing on wage growth to push for sustainable inflation reaching target. With November's report being a disappointment, BoJ will patiently wait for the spring wage negotiation to assess the pace of wage inflation before any policy changes. USD/JPY rose by 0.24% to 144.80 as JGB yields slip further.

Australian November CPI continue to moderate as we forecast to 4.3% y/y from 4.9%, just shy of 4.4% expected. While monthly CPI is not as comprehensive as the quarterly CPI, it provides us with a good direction of where Q4 CPI is heading, which is a resumption to the previous downtrend after an energy led spike in Q3. Regional equities have reversed early optimism to trade close to unchanged while commodity prices remain steady. AUD/USD is 0.24% higher at 0.6702, NZD/USD is 0.05% higher at 0.6242 while USD/CAD slipped 0.06% on higher oil as more Red Sea conflict surfaces. Elsewhere, EUR/USD is unchanged and GBP/USD is 0.06% lower.

North American session
The USD advanced through the North American session, gaining around 0.3% across the board. EUR/USD dropped to test the 1.09 support area, while USD/JPY moved back up to 144.40 after resisting the firmer USD tone through the European morning. 
The USD benefited from the stronger than expected IBD/TIPP economic confidence index, which rose to 44.2 in January, its highest since April. This seemed to trigger the USD strength, although the data only had a modest impact on yields.
Earlier, US trade numbers passed without much impact., but the Canadian numbers did seem to trigger some softness sin the CAD. USD/CAD rise around 30 pips to 1.34 after the trade balance for November came in slightly lower than expected at CAD1.57bn, while the USD didn’t see any general reaction to the slightly smaller than expected US deficit of USD63.2bn.