INTERNATIONAL TRADE: Chinese 12m Trade Surplus At $1.2trn, Familiar Themes Noted

• Although NZD remains among the weakest in G10 on Monday, constructive risk sentiment and a softer dollar backdrop has continued to support the NZDUSD recovery ahead of the NY crossover. NZDUSD is now just 0.17% lower at 0.5797, representing a solid bounce from the overnight lows of 0.5766.
• As a reminder, the Kiwi dollar notably declined amid comments from the newly appointed RBNZ Governor Breman, indicated that market conditions have tightened “beyond what is implied by our central projection” for the official cash rate. ANZ said that “markets were caught by surprise by the comments, which weren’t scheduled, and it looks like a deliberate attempt to address market pricing and the tightening in financial conditions.”
• While the upcoming US data will likely be the most meaningful driver of NZDUSD sentiment, it is worth pointing out we have New Zealand Q3 GDP during Thursday’s APAC session. After activity contracted 0.9% q/q in the second quarter, some rebound is expected in Q3 and into Q4. The RBNZ forecast a 0.4% q/q rise in Q3 GDP in November.

• USDJPY has been pressured by lower core yields on Monday and the monthly Tankan survey / wage report which reinforce the expectations for a BOJ hike this week.
• Most recent weakness sees USDJPY extend its intra-day range to around 115-pip, with the latest dip prompting a brief breach of last week’s lows below 154.90.
• Below here, the December 05 low at 154.35 and the 50-day EMA at 153.95 represent an important support area as we navigate both the US data releases and BOJ meeting this week.
• Broad dollar depreciation sees the likes of EURUSD and GBPUSD press to fresh session highs, although ranges remain relatively contained and both pairs remain shy of last Thursday’s peaks.
• Fed's Miran and Williams are scheduled to appear later today, while US empire manufacturing and the NAHB housing market index are on the calendar in terms of data.

You are invited to join an MNI Webcast with Alberto Musalem, President & CEO, Federal Reserve Bank of St Louis.

Details below:

• Speaker: Alberto Musalem, President & CEO, Federal Reserve Bank of St Louis.
• Topic of discussion: ‘U.S. Economy & Monetary Policy.’
• Date: Tuesday January 13 from 10am to 10:35ET; 3pm to 3:35pm GMT
• This event will be run as a Zoom Webinar and is a public, on-the-record event.

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