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.
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.
