ForexLive Asia-Pacific FX news wrap: Yen added to its gains, USD/JPY back under 156.00

Japan:

• BoJ Gov Ueda says will raise policy rate if economic, price conditions continue to improve
• Expectations are that Japan will intervene in the currency market if the yen falls to 165
• Recapping Japan’s wholesale inflation data earlier – helping to fuel rate hike chatter
• USD/JPY back under 156.00
• Japan December PPI +0.3% m/m (expected +0.4%) 3.8% y/y (expected 3.8%)
• A majority of Japanese companies see wage hikes as a priority investment area this year
• ICYMI: Nomura are now forecasting a Bank of Japan (BoJ) interest rate hike next week

Other:

• European Central Bank policy makers Patsalides and Centeno speaking Thursday
• Rabobank sees a likely weaker AUD/USD ahead, forecast to 0.60
• Bank of Canada deputy governor Gravelle speech on balance sheet normalization
• Netanyahu says that Hamas has reneged on the previously agreed terms of a ceasefire.
• UBS forecast USD/CNY to hit 7.5 by June 2025
• BOK’s Rhee says need for further rate cuts is higher, downside risk to economy has risen
• Bloomberg says Bank of Japan likely to hike rates next week
• BOK plans to expand the cap on temporary special loans for small and medium businesses
• PBOC sets USD/ CNY central rate at 7.1881 (vs. estimate at 7.3247)
• Bank of Korea Governor Rhee Chang-yong set to explain the surprise interest rate decision
• Bessent expected to say “must ensure that US dollar remains the world’s reserve currency”
• Bank of Korea leaves rate unchanged at 3% vs. cut to 2.75% expected
• Pricing for February Reserve Bank of Australia rate cut jumps after the strong jobs report
• Australia December 2024 unemployment rate 4.0% (vs. 4.0% expected)
• Australian Consumer Inflation Expectation, January 2024: 4.0% (vs 4.2% previously)
• ECB’s Centeno says interest rate will continue ideally toward 2%
• Goldman Sachs say cooler-than-expected core CPI support Fed easing cycle still in progress
• Canada could impose countermeasures on up to C$150 billion worth of imports from the U.S
• Bank of England MPC member Taylor calls for pre-emptive interest rate cuts
• New Zealand inflation indicator data: December Food Price Index +0.1% m/m (prior -0.1%)
• Forexlive Americas FX news wrap 15 Jan: US CPI does not scare market.Yields down.Stocks up
• Short selling firm Hindenburg Research is shutting down
• NASDAQ snaps five-day losing streak with its best day since November 6
• Trade ideas thread – Thursday, 16 January, insightful charts, technical analysis, ideas

Speculation
surrounding a rate hike at the Bank of Japan meeting on January 23
and 24 continued to escalate here again today. We had wholesale
inflation data. The PPI remained steady at 3.8% in December 2024.
Bloomberg cited unnamed sources (‘people familiar with the matter’)
as saying Bank of Japan officials see a good chance of an interest
rate hike next week.

USD/JPY
dropped under 156.00, and then like a rock to lows circa 155.25
before managing a bounce. Its circa 155.90 or so as I update.

Also
of interest during the timezone was another strong employment report
from Australia The headline result was 56K jobs added, well ahead of
the 15K expected. The caveat to this was that full-time employment
dropped nearly 24K, with part-time rocketing +80K.

The
unemployment rate ticked up from 3.9% to 4.0%, the participation rate
ticked up by 0.1% also.

Pricing
for a February Reserve Bank of Australia rate cut remains around 65%.
I’d caution that official quarterly inflation data is due from
Australia on January 29 so don’t go betting the farm until we see
that.

AUD/USD
dribbled lower on the session.

The Bank of Korea surprised with an ‘on hold’ rate decision vs. a 25bp cut expected.

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