Asia Summary and Highlights 4 Jan

Asia Session

BOJ Gov Ueda says he hopes Japan's economy can balance rises in wages and & inflation which does not bring any new information to market participants. The market focused on potential escalation of geopolitical tension as the U.S. may retaliate after the Red Sea attack. Market sentiment was not bright after the overnight slump in U.S. equity market and sentiment continue to remain sour in the Asia session. USD has outbid JPY for haven and see USD/JPY rose 0.26% to 143.66 with U.S. Treasury Yields in the green while JGBs yields in the red. 

 Once again the PBoC has fixed the onshore Yuan significantly stronger than expected in an attempt to slow the fall of Yuan in sight of recent USD strength. It is a mized picture for China on Thursday as we see the Caixin Services PMI for December came in stronger at 52.9 vs 51.6 expected but we are also hearing Fitch downgrades four Chinese National asset management firms. Shrugging off soft regional sentiment, the Aussie gain proxy support and see AUD/USD trading 0.11% higher at 0.6739, NZD/USD is also 0.28% higher at 0.6264 while USD/CAD slipped 0.1% to 1.3338 on higher oil. Elsewhere, EUR/USD is up 0.05% and GBP/USD is up 0.02%.

North American session
The USD gained across the board through the North American session, with USD/JPY making the most pronounced move, rising around 90 pips to a high of 143.73, before correcting to around 143.25 after the FOMC minutes. Other currencies declined more modestly. EUR/USD saw a brief move below 1.09, and AUD and CAD also lost 0.2% or less, while GBP/USD actually rose slightly, gaining 40 pips to 1.2665. The CHF also rose, with USD/CHF dropping from 0.8540 to 0.8505. 
The USD remained firm in the immediate aftermath of the FOMC minutes, which showed caution towards the possibility of easing, though with the minutes also seeing progress on inflation the USD did eventually move lower, as gains UST yields were erased. The tone of the minutes consistent with earlier comments from the Fed’s Barkin, which were seen as mildly hawkish, helping the USD gains early in the session, although in practice we saw them as essentially in line with the more dovish tilt seen at the last FOMC.
Datawise, December’s ISM manufacturing index at 47.4 from 46.7 and November JOLTS job openings at 8.79m from 8.852m were not far from consensus, the latter down only because October was revised up from 8.733m. Three of the five components that make up the ISM composite increased, production to 50.3 from 48.5 and employment at 48.1 from 45.8, both picking up from weaker November data. Deliveries also increased to 47.0 from 46.2. New orders however slipped to 47.1 from a firmer November reading of 48.3 while inventories at 44.3 slipped from November’s 44.8. Prices paid are not a contributor to the composite, but at 45.2 from 49.9 reversed a November bounce.