SOUTH KOREA: Unemployment Drops, Details Show Mixed Picture
- South Korea's unemployment rate fell to 3.0% in January , down from 3.3% in December. While the rate itself improved, the overall labor market showed signs of slowing, posting its weakest job growth in 13 months.
- The number of unemployed persons stood at 1.21 million, an 11.8% increase compared to the previous year with the youth unemployment rate rising to 6.8%.
- New applicants for job-seeking benefits rose by 8.0% year-on-year to 201,000 in January, primarily driven by the health, welfare, and business service sectors.
- The economy added only 108,000 jobs year-on-year, the smallest gain since December 2024, led by health and social welfare services (+185,000) and transportation/storage (+71,000). whilst manufacturing sector shed 23,000 jobs, its 19th consecutive month of decline, whilst construction fell for the 21st straight month, losing 20,000 jobs.
- The headline result is enough to support a further hold from the BOK but look for a policy response from the government to boost employment in the first half of the year.
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CROSS ASSET: USD Weakness Extended, Precious Metals Surge Post Powell Headlines
Following earlier headlines around a US Federal prosecutor probe into Fed Chair Powell, initial market reactions have extended. The USD is firmly on the backfoot, with the BBDXY off 0.15% to be back under 1210. Gains are fairly uniform versus the USD, but CHF, up 0.35% is the best performer in the G10 space so far. USD/JPY is back to 157.65/70, comfortably off earlier highs of 158.20. US equity futures have weakened further, now down 0..30-0.50%, with tech leading the down move. Commodities are higher, with gold up over 1.85% to fresh record highs, while silver has gained +4%.6. US Tsy futures up up +03 for the 10yr, but remain with recent ranges.
- US Fed Chair Powell stated after the remarks: "POWELL SAYS HE HAS DEEP RESPECT FOR RULE OF LAW, BUT CALLS ACTION UNPRECEDENTED, SHOULD BE VIEWED IN CONTEXT OF ADMINISTRATION'S ONGOING THREATS AGAINST THE CENTRAL BANK" (via RTRS).
- We also had remarks from US President Trump aboard US Airforce One. He gave wide ranging remarks, noting the situation in Iran is being watched closely (with strong options considered). Trump also gave hawkish remarks on Greenland, stating, one way or another the US will have Greenland.
AUD: AUD/JPY - Looking For Momentum Above 105.00, Early Headwinds For Risk
The Friday night range was 105.53 - 105.78, Asia is currently trading around {AUDJPY Curncy}. The pair is trying to recapture its upward momentum above 105.00 to start the year, this morning's report of the DOJ threatening to indict the FED has seen risk start the week on the back foot and this could have an impact providing it with some short-term headwinds. On the day, watch to see if risk is able to shrug off these new worries surrounding FED independence, if not support is seen back toward the 104.50-104.80 area.
- The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 57 Points
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
CHINA: Financing Data and Exports Focus, HSI Lags Onshore Peers
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- Data focus for the week is on aggregate financing / new new yuan loans and trade data. Exports are expected to remain resilient with full year 2025 forecasts near 5.00%.
- The HSI underperformed relative to onshore last week, with the looming IPO pipeline for 2026 a potential explanation as the HSI remains undervalued relatively.
- CNH crosses continue a clear outperformance trend as CNH/JPY has broken to fresh highs above 22.66 at the tail end of last week.
- Bonds remain in tight ranges with eyes on daily OMO to see if the trend of liquidity withdrawal is set to continue.
