- Strong Chinese data suggest rate rise is imminent
- Chinese CPI +2.7% YoY, retail sales +22% YoY, industrial production +12.8%
- Japanese GDP +0.9% in Q4
- AUD dipped initially on employment data, which was weaker than expected
- News that NY state may have to borrow to bridge deficits has thrown the market focus back onto the parlous state of US national and state financing
- South Korea keeps base rate unchanged
- RBNZ in no hurry to raise rates
- Regional bourses mixed, Nikkei +0.5%, HK and Shanghai -0.5%
- Japanese corporate repatriations still apparent
Early focus was on the AUD and the NZD. The NZD fell significantly after the RBNZ statement and this weighed on the AUD also, although AUD/NZD did make decent gains back above 1.3000. The AUD/USD fell from .9140 to .9120 after the employment data, bounced back to 40 and then re-tested the session lows. Dealers report option-related buying mixed in with corporate demand close to the lows. Range: .9114/56
USD/JPY and the JPY crosses drifted lower for the entire morning session amid the corporate repatriations, although volumes were relatively small. The Chinese data also ushered in some selling of the risk trades as the prospect of a Chinese rate hike seemed to increase. USD/JPY range 90.22/55, EUR/JPY 123.04/65
EUR and GBP have been very quiet in tight ranges, 1.3630/61 and 1.4950/87 respectively.
Markets: Nikkei +0.5%, HK -0.4%, Shanghai -0.6%, Kospi -0.1%. Gold steady at $1107/oz.
