JPY: Yen Up With January Hike Odds As Ueda Speaks In Tokyo
Jan-15 05:09
USD/JPY is moving lower, the pair last near 157.50/55, close to session lows. We are up around 0.30% in yen terms, comfortably the best G10 performer in what has been a muted session ahead of the US CPI print later.
- USD/JPY's down move has been aided by remarks by BoJ Governor Ueda in Tokyo (per BBG/Rtrs). Ueda stating that a rate hike decision will be made next week at the policy meeting. The Governor noting US economic developments and wage trends will be key watch points. He added that the recent branch managers meeting expressed positive trends around wage trends. See this BBG link.
- The comments largely echoed those made by Deputy Governor Himino yesterday, but no push back from Ueda on rate hike has likely encouraged markets to believe next week's meeting is a live one. Current OIS pricing indicates: a 69% probability of a 25bp hike in January; a cumulative 86% chance by May; and a full 25bp increase not fully priced in until May 2025. The Jan meeting odds have risen since Himino spoke yesterday.
- For USD/JPY levels, lows earlier this week were at 156.92, while the 20-day EMA is around 156.71.
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EQUITIES: Stocks Edge Lower Following China Data, Upcoming Central Bank Meetings
Dec-16 05:09
- Asian markets fell broadly today, weighed down by disappointing Chinese retail sales data, which grew just 3% y/y, missing expectations of 5%. China’s CSI 300 declined for a second consecutive session, dragging down Hong Kong stocks, while sentiment in Australia was hit by falling iron ore prices, pulling the ASX lower for a fifth straight day. South Korea's equities erased earlier gains following political uncertainty from President Yoon's impeachment, though analysts see limited long-term economic impact.
- The MSCI Asia gauge slipped as traders adopted a cautious stance ahead of a busy week of central bank decisions, including the Federal Reserve, Bank of Japan, and Bank of England. Meanwhile, the dollar steadied near recent highs, Asian currencies weakened to a two-week low, and Bitcoin reached a new record high amid continued optimism.
- Japanese equities were mostly lower today with investors remaining cautious ahead of key central bank meetings, including the Bank of Japan’s policy decision later this week. The TOPIX 0.20% lower, while the Nikkei is flat, exporters traded slightly better as the yen weakened a touch. While a rally on Friday for semiconductor stocks has done little to help Tokyo Electron which trades 0.50% lower.
- Taiwan's Taiex has pared earlier gains to trade flat as TSMC gives back some gains. There has been decent size selling of South Korean equities by foreign investors today, with a total outflow of $322m, the KOSPI is 0.36% lower, while the KOSDAQ is 0.67% higher.
- Australian mining stocks weighed on the ASX, with BHP, Rio Tinto, and Fortescue falling, while gold miners also declined as precious metal prices dipped, the ASX down 0.65%. New Zealand NZX 50 closed 0.34% higher.
US TSYS: Large TY Put Sellers
Dec-16 04:57
- TYF5 110 puts traded at 0'28 x 10,000
GOLD: US Rate Cut Expectations in Focus for Gold.
Dec-16 04:48
- As this week’s Federal Reserve Monetary decision appears a near certainty, yet markets are now looking through that to the risks for 2025.
- Rate cuts are good for gold as it reduces financing costs and for 2025 Gold traders are looking at the economic data in the US and questioning whether the three cuts in rates next year is appropriate.
- Having endured two down days in succession, Gold opened this morning in Asia at US$2,648.23 following a very heavy US close, moving only marginally higher to $2,653.86.
- The recent weakness will have little impact on what has been a strong year for gold prices, largely due to expectations for US Rates, yet also evidence that key Central Banks such as China’s PBOC are increasing their purchases of the precision commodity.
- The World Gold Council’s forecast for Gold in 2025 is for a modest increase and no doubt will face the ever present challenges from growth and inflation (and hence the FED) as well as geo-political upheaval.
