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USD/JPY is hitting 2-month lows below 150.90:

• its not just yen strength, thought that is notable. ‘EUR, GBP, AUD, NZD, CAD, CHF are all up against the dollar on the session here.
• but yen is the outperformer
• Japanese equities are lower, not liking the stronger yen

This article was written by Eamonn Sheridan at www.forexlive.com.

U.S. plans a significant reduction of its diplomatic mission in China

• affecting embassies and consulates in Beijing, Hong Kong, and other cities
• move is part of Trump’s broader initiative to cut government spending
• potential layoffs could occur by Friday

This article was written by Eamonn Sheridan at www.forexlive.com.

The latest Labour Force report from the Australian Bureau of Statistics.

Employment +44K, another blockbuster!

• expected +20k, prior +56.3k

Unemployment Rate 4.1%, its risen but the jump in the participation rate accounts for this

• expected 4.1%, prior 4.0%

Participation Rate 67.3%, its highest ever, female workforce participation rising

• expected 67.1%, prior 67.1%

Full Time Employment +54.1k (part time -10.1k (prior +80k )

• prior -23.7k

***

This is another strong Aussie jobs report. A big jump in jbs added again, and this time all full time.

This article was written by Eamonn Sheridan at www.forexlive.com.

Apart from what has been posted there is no fresh news nor data.

USD/JPY sliding further after its overnight move:

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump:

• “I’m going to be announcing tariffs on cars, and semiconductors, and chips, and pharmaceuticals, drugs and pharmaceuticals, and lumber, probably, and some other things over the next month, or sooner, and it’s going to have a big impact on America.”

Adds that car firms are calling him to say they want to make their cars in the US.

And:

• “If they don’t make their product in America, then they, very simply, they have to pay a tariff”

***

I posted on this yesterday:

• More on Trump’s proposed 25% tariff on automobiles, pharmaceuticals & semiconductor chips

I’ve seen so much bad information on what Trump said. He did not announce the tariffs. He did not announce an April 2 start date. He still hasn’t made a decision on the tariffs yet. Be careful what you read folks.

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan’s Trade Minister, Yoji Muto, is planning a trip to the United States in March to request that the Trump administration exempt Japan from upcoming tariffs on steel and automobiles, according to a report by the Asahi newspaper on Thursday.

Muto is reportedly arranging meetings with newly appointed U.S. Commerce Secretary Howard Lutnick, Energy Secretary Chris Wright, and other senior officials. Discussions will also cover Japan’s plans to increase purchases of American natural gas and the stalled acquisition of U.S. Steel by Nippon Steel.

He aims to visit before March 12, when the 25% tariffs on U.S. imports of steel and aluminum are set to take effect. However, the exact timing of the trip remains uncertain and will depend on Japan’s parliamentary budget deliberations, Asahi cited multiple unnamed government sources as saying.

Japan Inc. will be right behind him!

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump says will fill up the US SPR ‘fast’.

He is adding more:

• we will dramatically cut taxes
• No tax on tips
• Hopefully no taxes on social security
• We will cut taxes on domestic producers of oil and gas

I don’t know why he is just repeating campaign promises. He is the boss now. Time to talk has finished, get the promises done.

Earlier:

• Trump plans a cash splash with DOGE savings

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump says he is considering

• giving 20% of savings from DOGE cuts as payouts to Americans
• another 20% of savings could go toward paying down the federal debt

Trump speaking at the FII Priority Summit in Miami

This article was written by Eamonn Sheridan at www.forexlive.com.

POLITICO has the report, here.

In summary:

• The EU is open to reducing its 10% tariff on cars as part of broader negotiations with the U.S.
• EU Trade Commissioner Maroš Šefčovič signaled willingness to discuss a larger trade deal, including tech regulations and defense spending.
• President Trump has criticized the EU’s car tariffs and threatened “reciprocal tariffs” on various sectors, including autos, semiconductors, and pharmaceuticals.
• Šefčovič countered Trump’s complaints, arguing that the EU’s average industrial tariffs are comparable to the U.S. and highlighting the U.S. 25% tariff on pickup trucks.
• The U.S. trade deficit with the EU in goods was $235.6 billion in 2024, but including services, the deficit drops to around $50 billion.
• Šefčovič warned of retaliation if Trump imposes sweeping tariffs but emphasized hopes for a diplomatic resolution.
• Meetings planned with senior U.S. officials, including Commerce Secretary Howard Lutnick, Trade Representative-nominee Jamieson Greer, and senators from both parties.

This article was written by Eamonn Sheridan at www.forexlive.com.

more to come

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Expectations I had seen centred on:

• Headline crude +2.2 mn barrels
• Distillates -3.5 mn bbls
• Gasoline +0.8 mn

—

This data point is from a privately-conducted survey by the American Petroleum Institute (API).

• It’s a survey of oil storage facilities and companies
• The official report is due Wednesday morning US time.

The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)

• Its based on data from the Department of Energy and other government agencies
• Whereas information on total crude oil storage levels and variations from the previous week’s levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.
• the EIA report is held to be more accurate and comprehensive than the survey from the API

This article was written by Eamonn Sheridan at www.forexlive.com.

You’ll note that the People’s Bank of China Loan Prime Rate (LPR) setting is due today. Its not as relevant as it once was.

I’ve posted on this before, but ICYMI.

ps. The TL;DR on this (below) is that in June 2024 the PBoC designated the 7-day reverse repurchase (repo) rate as the primary policy rate.

Moar? OK:

In 2024, the People’s Bank of China (PBoC) implemented significant reforms to its monetary policy framework to enhance the effectiveness of its policy transmission and better support economic growth.

Shift to the 7-Day Reverse Repo Rate as the Main Policy Rate:

Traditionally, the PBoC utilized multiple policy rates, including the Medium-term Lending Facility (MLF) and Loan Prime Rate (LPR) rates, to influence market liquidity and interest rates. In June 2024, Governor Pan Gongsheng announced a strategic shift, designating the 7-day reverse repurchase (repo) rate as the primary short-term policy rate. This move aimed to streamline the monetary policy framework and improve the transmission of policy signals to the broader economy.

The 7-day reverse repo rate is pivotal in the PBoC’s open market operations, where it provides short-term liquidity to commercial banks. By focusing on this rate, the PBoC seeks to exert more direct influence over short-term market interest rates, thereby enhancing the responsiveness of financial institutions to policy changes.

Adjustments to Policy Rates:

In line with this new framework, the PBoC made several rate adjustments:

• July 2024: The 7-day reverse repo rate was reduced by 10 basis points from 1.8% to 1.7%.

• September 2024: The rate was further lowered by 20 basis points to 1.5%, marking the lowest level on record since at least 2012.

These reductions were intended to lower borrowing costs and stimulate economic activity amid signs of economic slowdown.

Changes to the Loan Prime Rate (LPR) and MLF Setting Dates:

The PBoC also reformed the mechanisms for setting the Loan Prime Rate (LPR) and the Medium-term Lending Facility (MLF) rates to align with the new policy framework:

• Loan Prime Rate (LPR): Previously, the LPR was closely linked to the MLF rate. With the shift to the 7-day reverse repo rate as the main policy rate, the PBoC aimed to reform the LPR setting mechanism to better reflect market rates and improve the transmission of monetary policy.

• Medium-term Lending Facility (MLF): The PBoC adjusted the timing of its MLF operations, conducting them later than usual and providing liquidity through open market operations. This approach was part of the broader strategy to reduce the prominence of the MLF rate in favor of the 7-day reverse repo rate.

In October 2024 the PBOC cut the one-year LPR to 3.1% and the five-year LPR to 3.6%.

LPRs have remained unchanged since that drop in October. The 7-day reverse repo rate remains at 1.5 since its drop in September.

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You’ll note, too, on the calendar is Australia’s employment report. The jobs market here in Oz has been solid and that’s expected to have been the case in January. A small tick up in unemployment is expected. Yesterday we had official Australian Bureau of Statistics wage figures for Q4. A slight miss, but stable enough growth:

• Australian data – Wage Price Index (Q4 2024 ) +0.7% q/q (expected +0.8%)

The RBA cut its cash rate earlier this week. The Bank will be on hold now for a least a couple of meeting ahead.

• ForexLive Asia-Pacific FX news wrap: RBA cuts rates for the first time in four years

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.