Fig. 1: AUD/USD Vs. SGX Iron Ore Futures
Source: MNI - Market News/Bloomberg
FISCAL: The UK tax authority is missing out on billions of pounds of tax revenue because of a “failure to better resource compliance” and is delivering an “unacceptable” service, according to a cross-party group of MPs. (FT)
ECB: European Central Bank's governing council member Mario Centeno said on Tuesday the current process of interest rate increases is approaching its end. The central banker, who was answering Portuguese legislators during a committee hearing in Lisbon, added even though inflation may have some resistance in January and February it will resume falling in March. (RTRS)
FISCAL: Eurogroup President Paschal Donohoe has a “window of opportunity” in the first quarter to steer member states away from untargeted energy support packages adopted during last year’s gas price crisis, EU officials told MNI on Tuesday. (MNI)
FISCAL: The European Commission’s uphill task in driving through its preferred reforms of the European Union’s fiscal rules has been made even tougher by the bloc’s new Swedish presidency, which sympathises with other member states opposing the proposals and has left the issue off the agenda for next week’s finance ministers’ meeting, EU officials told MNI. (MNI)
GERMANY: Germany will be able to get through this winter with enough gas even if an “extreme” cold spell hits the region, according to an association of storage operators. (BBG)
FRANCE: Emmanuel Macron’s government presented a plan to gradually raise France’s minimum retirement age to 64 by 2030 from 62, sparking anger among labor unions who immediately called for strikes to protest the reform. (BBG)
FRANCE: The French government sees additional gains of 17.7 billion euros ($19.00 billion) by 2030 thanks to its proposed pension reform that will raise the regular retirement age to 64 from 62, France's Finance Minister Bruno Le Maire said on Tuesday. (RTRS)
FRANCE: France’s main labor unions responded to President Emmanuel Macron’s plan to raise the retirement age by calling a first day of strikes and protests on Jan. 19. (BBG)
FED: The Federal Reserve should keep hiking interest rates and while there has been a recent decline in some inflation measures there's a lot more work to do, Governor Michelle Bowman said Tuesday. (MNI)
FED: Early last October, Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, spoke to several dozen graduate students at the University of Minnesota. (New York Times)
FED: Directors at three of the Federal Reserve’s 12 regional branches voted to hold the discount rate unchanged ahead of the central bank’s meeting last month. (BBG)
FED: The Federal Reserve on Tuesday added to the diversity of its regional Fed bank board leadership, announcing a group of chairs and deputy chairs that for a second straight year are majority women and minorities. (RTRS)
ECONOMY/POLICY: President Joe Biden asked Treasury Secretary Janet Yellen to stay in her post, and she agreed, a White House official familiar with the matter said. (BBG)
FISCAL: House Republican Majority Leader Steve Scalise sidestepped thorny questions Tuesday on whether Congress would allow the U.S. to default on its debt after lawmakers adopted new rules making it more difficult to raise federal limits. (CNBC)
POLITICS: The Republican-led House Committee on Oversight and Accountability announced Tuesday that it has launched an investigation into classified documents found in President Biden's former office. (Axios)
EQUITIES: Every January, Apple releases the total amount of money that App Store developers have earned since 2008, a data point that allows analysts and Apple investors to get an idea of how much money the App Store makes. This year’s disclosure suggests that Apple’s App Store growth has plateaued. (CNBC)
GLOBAL TRADE: The European Commission wants to ask Big Tech and European Union telecoms providers about their investment outlays and cloud infrastructure plans before tabling legislation that could make the former pay for network costs, a person familiar with the matter said on Tuesday. (RTRS)
GLOBAL TRADE: Belgium’s prime minister has accused the US of an “aggressive” campaign to lure European companies to the other side of the Atlantic with the promise of support under its new green subsidy act. (FT)
GLOBAL TRADE: The European Union is skeptical that the US will make any meaningful changes to the $370 billion green investment plan that the bloc says unfairly subsidizes American companies. (BBG)
GLOBAL TRADE: The US will keep discussing with Hyundai Motor Co. as it acknowledges the company’s concerns regarding the Inflation Reduction Act, Under Secretary for Economic Growth, Energy and the Environment Jose W. Fernandez told reporters in Seoul. (BBG)
USMCA: The United States, Mexico and Canada will take steps to strengthen North America's semiconductor industry, the White House said on Tuesday, as the countries try to resolve a dispute over Mexico's energy policy that has angered investors. (RTRS)
U.S./CHINA: Fresh off a fraught leadership election and only a day after it passed a contentious rules package, the US House of Representatives on Tuesday voted overwhelmingly to establish a select committee on US-China strategic competition, affirming its intention of keeping China at the forefront of the new Congress’s agenda. (SCMP)
CHINA/TAIWAN: China said the rising number of warplanes it sends toward Taiwan were due to the island’s “military collusion” with the US, shedding light on its motives for the threatening activity. (BBG)
U.S./JAPAN: US President Joe Biden and Japanese Prime Minister Fumio Kishida will affirm cooperation between their governments on technology that has both military and civilian applications when they meet this week, Yomiuri reports, citing unidentified officials from both countries. (BBG)
JAPAN/CHINA: Japan lodged a protest to China over its suspending the issuance of visas for Japanese citizens and asked that it overturn the action, Chief Cabinet Secretary Hirokazu Matsuno said on Wednesday. (RTRS)
CORONAVIRUS: Countries should consider recommending that passengers wear masks on long-haul flights, given the rapid spread of the latest Omicron subvariant of COVID-19 in the United States, World Health Organization (WHO) officials said on Tuesday. (RTRS)
CORONAVIRUS: Accusations by the United States and other Western countries of Beijing losing control over the coronavirus pandemic are speculation, Chinese Ambassador to Russia Zhang Hanhui told Russia's TASS news agency in remarks published on Wednesday. (RTRS)
BOJ: The Bank of Japan's (BOJ) move to tweak its bond yield curve control last month was a reasonable decision aimed at making its policy sustainable, former board member Sayuri Shirai said on Wednesday. (RTRS)
JAPAN/JGBS: Japan's Ministry of Finance is striving to extend the duration of government bond (JGB) holdings to correct heavy issuance of short-term JGBs issued to fund steps against the COVID-19 pandemic since 2020, a top ministry official said on Wednesday. (RTRS)
JAPAN: Uniqlo parent Fast Retailing Co Ltd on Wednesday said it would raise wages by as much as 40%, focusing on its home market of Japan, where salaries have been under downward pressure for years. (RTRS)
JAPAN: The ratio of Japanese households expecting prices to rise a year from now stood at 85.0% in December, down from 85.7% in September, a quarterly survey by the Bank of Japan (BOJ) showed on Wednesday. The ratio of households expecting prices to rise five years from now stood at 76.7%, down from 78.3% three months ago, the survey showed. The quarterly BOJ survey on households is among data closely watched by the central bank to determine the outlook for inflation. (RTRS)
TURKEY: Capital Markets Board is monitoring transactions at Borsa Istanbul “in real time” as the regulator fulfills its duty of inspection against market-disrupting actions, the regulator says in statement after market close on Tuesday. (BBG)
MEXICO: The US wants to help Mexico bankroll its ambitious plan for a slew of solar parks along their border, which is likely to require private funds and development bank loans, according to top diplomat focused on Latin America. (BBG)
MEXICO: Mexican President Andres Manuel Lopez Obrador said on Tuesday that he had urged U.S. President Joe Biden to press Congress for an immigration reform to help regularize the migratory status of millions of Mexicans in the United States. (RTRS)
BRAZIL: Brazil's central bank chief Roberto Campos Neto said on Tuesday that policymakers have taken the necessary steps to ensure inflation reaches its targets until 2025, reinforcing they will remain vigilant to see if keeping interest rates at the current 13.75% level for long enough will ensure such convergence. (RTRS)
BRAZIL: Former Brazil President Jair Bolsonaro used his Facebook account to share a video of voter fraud conspiracies shortly after being discharged from a US hospital Tuesday. (BBG)
RUSSIA: U.S. plans to train Ukrainian servicemen in the use of Patriot missiles provides further proof of Washington's participation in the Ukraine conflict, Russia's ambassador to the United States said on Tuesday. (RTRS)
SOUTH AFRICA: South African state power utility Eskom said on Tuesday it will implement "Stage 6" rotational power cuts every night from 1600 to 0500 local time (1400 to 0300 GMT) until further notice due to the breakdown of several of its power generating units. The "Stage 6" power cuts, the worst outage level on record, require up to 6,000 megawatts to be shed from the national grid and mean at least six hours a day without power for most South Africans. (RTRS)
PERU: Peru's government approved an overnight curfew in the restive southern region of Puno, the country's prime minister announced on Tuesday, after violent protests escalated earlier this week leaving at least 17 dead. (RTRS)
PERU: Peru's top prosecutor's office on Tuesday said it launched an inquiry into new President Dina Boluarte and members of her cabinet over violent clashes that have seen at least 40 killed and hundreds injured since early December. (RTRS)
METALS: One trader helped exacerbate the massive nickel short squeeze on the London Metal Exchange last March by building up a $600 million position as the market spiraled out of control. (BBG)
OIL: U.S. Treasury Secretary Janet Yellen said on Tuesday that the price cap on Russian oil imposed by Western countries in December so far appeared to be achieving its goals of keeping Russian oil on the market while limiting Russia's revenues. (RTRS)
OIL: The U.S. Energy Information Administration on Tuesday raised its forecast for this year's crude output and petroleum consumption growth, projecting even higher growth in 2024. (RTRS)
OIL: Chevron Corp's first cargo of Venezuelan crude under a U.S. license received in November has departed from a ship-to-ship transfer hub near Aruba to its Pascagoula, Mississippi refinery, according to shipping data seen by Reuters on Tuesday. (RTRS)
PBOC: In 2023, further cuts to the reserve requirement ratio (RRR) and the over-five-year Loan Prime Rate (LPR) can be expected, as authorities implement “accurate and forceful” monetary policy, according to experts cited by China Securities Journal. (MNI)
PBOC: The People’s Bank of China (PBOC) will ensure the real estate sector's smooth transition to a new development model, in plans discussed at a recent symposium, according to a notice posted on the PBOC’s social media account. (MNI)
ECONOMY: Shanghai targets 5.5% growth in general public budget revenue and about 3% rise in consumer prices this year, Mayor Gong Zheng says in a government work report at the annual local People’s Congress. (BBG)
ECONOMY: Authorities must first repair household incomes and improve confidence before excess savings can be converted into consumption, according to experts cited by Securities Times. (MNI)
PBOC NET INJECTS CNY71 BILLION VIA OMOS WEDNESDAY
The People's Bank of China (PBOC) on Wednesday conducted CNY65 billion via 7-day reverse repos and CNY 22 billion via 14-day reverse repos with the rates unchanged at 2.00% and 2.15%, respectively. The operation has led to a net injection of CNY71 billion after offsetting the maturity of CNY16 billion reverse repos today, according to Wind Information.
PBOC SETS YUAN CENTRAL PARITY AT 6.7756 WEDS VS 6.7611 TUES
The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 67756 on Wednesday, compared with 6.7611 set on Tuesday.
JAPAN NOV, P LEADING INDEX 97.6; MEDIAN; 97.6; OCT 98.6
JAPAN NOV, P COINCIDENT INDEX 99.1; MEDIAN; 99.1; OCT 99.6
AUSTRALIA NOV CPI +7.3% Y/Y; MEDIAN +7.2%; OCT +6.9%
AUSTRALIA NOV TRIMMED MEAN CPI +5.6% Y/Y; MEDIAN +5.5%; OCT +5.4%
AUSTRALIA NOV RETAIL SALES +1.4% M/M; MEDIAN +0.6%; OCT +0.4%
AUSTRALIA NOV JOB VACANCIES -4.9% Q/Q; OCT -2.8%
NEW ZEALAND DEC ANZ COMMODITY PRICE INDEX -0.1% M/M; NOV -4.0%
The ANZ World Commodity Price Index fell just 0.1% in December, as higher aluminium and dairy prices helped offset weaker returns for meat. In local currency terms the index dropped 3.8%, as the NZD appreciated 2.1% against the Trade Weighted Index. (ANZ)
SOUTH KOREA JAN 1-10 TRADE BALANCE -US$6.27BN
SOUTH KOREA JAN 1-10 EXPORTS -0.9% Y/Y
SOUTH KOREA JAN 1-10 IMPORTS +6.3% Y/Y
SOUTH KOREA JAN 1-10 DAILY AVERAGE EXPORTS -14.1% Y/Y
TYH3 deals at 114-07, +0-07, a touch off the top of its 0-08+ range on volume of ~71K.
JGB futures pull away from best levels to print -15 ahead of the bell. There hasn’t been much in the way of meaningful headline flow to tout, with ex-BoJ board member Shirai pointing to the benefits of a more flexible inflation target (a matter that is already being considered by the BoJ and government, per recent press reports), while suggesting that a fundamental shift in monetary policy is unlikely, stressing that the recent YCC tweak was based on promoting sustainable monetary policy.
The Japanese Ministry of Finance (MOF) sells Y731.8bn 30-Year JGBs:
The Japanese Ministry of Finance (MOF) sells Y4.87295tn 3-Month Bills:
Futures pared their overnight/early Sydney losses losses, with YM finishing -1.0 & XM settling flat, while cash ACGBs were little changed to 1bp richer. Offshore cures shaped the general direction of travel throughout the day.
NZGBs stuck to particularly narrow ranges on Wednesday, initially shifting cheaper at the margins in sympathy with Tuesday’s weakness in U.S. Tsys and Bunds, before closing at essentially neutral levels after Tsys moved away from session lows. This came as Asia-Pac participants looked to some of the more FI-supportive factors that were apparent during Tuesday’s wider session.
Regional equity sentiment has improved as the session progressed. Most of the major indices are tracking higher, while US futures haven't deviated too far away from flat, with eminis holding close to 3942 for now.
Gold has remained within recent ranges during today's session. We dipped earlier towards the $1872 level before recovering. We now sit back near $1878, little change versus NY closing levels. As has been the case since the start of the week, gold is largely holding a $1870/$1880 range. The market is waiting for fresh impetus, no doubt with an eye on Thursday's US CPI print.
Brent is lower, currently sitting not too far from lows for the week. We were last around $79.35/bbl. We remain comfortably within recent ranges, with resistance at $81.74 (20-day EMA) and support at $77.61 (Jan 5 low). WTI is following a similar trajectory, last around $74.35/bbl.
Early USD resilience has given way to weakness. The BBDXY currently back sub 1237, -0.10/0.15% off NY closing levels. AUD has led the way, first boosted by positive data and then later rising commodity prices.
Date | GMT/Local | Impact | Flag | Country | Event |
11/01/2023 | 0900/1000 | * | ![]() | IT | Retail Sales |
11/01/2023 | 1200/0700 | ** | ![]() | US | MBA Weekly Applications Index |
11/01/2023 | 1530/1030 | ** | ![]() | US | DOE weekly crude oil stocks |
11/01/2023 | 1800/1300 | ** | ![]() | US | US Note 10 Year Treasury Auction Result |