Ahead Today
G3: US mortgage applications, Germany industrial production
Asia: Bank of Thailand policy meeting, Taiwan Jan trade data, Malaysia industrial production
Market Highlights
Markets have continued to pare back expectations for early US rate cuts following a strong US jobs market report and Fed Chair Powell dismissing a March rate cut. Since last Friday, the broad US dollar index (DXY) gained 1.1%, while 10-year US yields rose 22bps to 4.10%.
ECB Governing Council Member Vujcic also said that patience is required before a pivot to a rate easing cycle. Meanwhile, Germany’s factory orders data showed a 8.9%mom jump in December from 0.3%mom in November, beating market consensus for a modest contraction. But the data masks underlying weakness in industrial activity. Sequentially, factory orders inched up by just 0.1%qoq, following a 3.8%qoq fall in Q3.
In Japan, wages rose 1%yoy in December, weaker than market consensus for a 1.4%yoy increase. That said, several major companies have reported plans for robust wage rise, as spring wage negotiations are under way. Evidence of a virtuous wage-price cycle will bolster the case for the BOJ to exit its negative interest rate policy.
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Regional FX
Asian FX retraced its losses against the US Dollar yesterday. USDCNH fell 0.3%, while USDKRW and USDSGD dropped 0.2%. However, the Malaysian ringgit weakened to 4.76 against the US dollar. Meanwhile, Philippines inflation moderated to 2.8%yoy in January, weaker than market consensus for 3.1%yoy, extending the disinflation trend. Taiwan’s headline inflation also slowed to 1.8%yoy in January from 2.7%yoy in December.