Asia Summary and Highlights 19 December

Asia Session

As most anticipated, the BoJ has decided to keep rates on hold in their December meeting. There is little forward guidance in the statement which seems to suggest the BoJ is taking its time or the medium term terminal rate may not be 1% as market thinks. The BoJ also released their review of monetary policy from a broad perspective and it concluded that 2% target of price stability should remain and the bank should keep enough room for cut in case of need to stimulate the economic amid crisis. USD/JPY is trading 0.37% higher at 155.38 as U.S. Treasury yield rises and JGB yields sliding since session begins.

After touching a session low at 0.6199, the AUD/USD has staged a minor rebound along major currencies against the USD. There does not seem to be a major change of sentiment as we see regional equities followed overnight momentum move to the south. The U.S. equities are taking a breather for now to brace for the BoJ.  AUD/USD is trading 0.04% higher at 0.6219, NZD/USD rose 0.13% to 0.563 while USD/CAD slipped 0.05% on barely higher oil. Else, EUR/USD is up 0.32% and GBP/USD up 0.14%.

North American session

US data showed housing starts weaker than expected, down 1.8% to 1289k, but permits stronger than expected, up 6.1% to 1505k, with the surprises in both cases coming in the volatile multiples sector. A record Q3 current account deficit of $310.9bn was much wider than expected, up from $275.0bn in Q2. The USD made modest gains in the morning, though these faded as the FOMC decision approached.

The FOMC eased 25bps as expected but the dots were more hawkish, with only 50bps rather than 100bps of easing seen in 2025, and with inflation forecasts revised higher too, the 2% target now seen being reached in 2027 rather than 2026. The USD bounced and extended its gains through Powell’s press conference, though USD/JPY saw only limited movement in the press conference with equities falling. Still, USD/JPY was higher above 154.50 from 153.80 before the decision. EUR/USD fell over a big figure to near 1.0365 as did GBP/USD to 1.2575. USD/CAD was a big figure higher at 1.4430 while AUD/USD fell to .6225 from marginally above .63.