ForexLive Asia-Pacific FX news wrap: USD slammed by Trump, then by the BoJ rate hike

• USD/JPY tested towards 155.20 after a hawkish hike from the Bank of Japan
• Morgan Stanley on reasons to be bullish China’s banking sector
• Yen finding a few bids after the Bank of Japan rate hike
• In 2024, China’s central bank expanded its gold reserves by 44.17 tons
• Bank of Japan hikes rates – as widely expected
• Japan’s largest trade union says very important to secure wage rises
• More on Trump saying he would rather not use tariffs against China
• European Central Bank President Lagarde is speaking on Friday
• The USD has slumped after Trump said prefer no tariff on China – AUD hits 5 week high
• Trump says would rather not have to use tariffs on China
• North Korea may be responsible for breach of the Phemex crypto exchange, US$70mn losses
• PBOC injects 200bn yuan vs. 795bn maturing (Medium-term Lending Facility (MLF) net drain)
• Singapore’s central bank eased monetary policy for the first time since 2020 – recap
• PBOC sets USD/ CNY reference rate for today at 7.1705 (vs. estimate at 7.2779)
• Oil prices slipping further
• Japan flash manufacturing PMI for January drops to 48.8 (prior 49.6)
• UK data – GfK Consumer Confidence dropped to its lowest level in over a year
• Monetary Authority of Singapore will slightly reduce the slope of the S$NEER policy band
• Shanghai plans to bypass China’s tight firewall – trying to attract foreign investment
• Japan December headline CPI +3.6% (expected +3.4%, prior 2.9%)
• South Korea closely tracking U.S. administration, global financial markets
• Ivanka Trump warns of fake cryptocurrency token using her name: ‘$IVANKA’
• Moreon Trump’s demand for lower rates – “I know interest rates much better than” the Fed
• Goldman Sachs maintained its buy rating on Apple (AAPL), but lowered its price target
• Australian Flash Manufacturing PMI for January leaps higher, almost into expansion
• Here are the 3 biggest risks (and 1 tail risk) worrying fund managers for the year ahead
• Trade ideas thread – Friday, 24 January, insightful charts, technical analysis, ideas
• ICYMI – Trump will “demand that interest rates drop immediately”
• S&P index closes at a new record high. Major indices close at session highs.
• Forexlive Americas FX news wrap: Trump speaks at Davos, US stocks hit a record

Trump
spoke in an interview with Fox, broadcast Thursday evening US time.
The key quote was Trump saying he would rather not use tariffs
against China:

• “But
  we have one very big power over China, and that’s tariffs, and they
  don’t want them, and I’d rather not have to use it, but it’s a
  tremendous power over China”

The
USD slumped on this, with major FX all gaining ground at its expense.

A
little while later we had the Bank of Japan decision. The Bank of
Japan raised its short-term policy rate to 0.5% from 0.25%

• This is the
  highest in 17 years

• The Bank also
  raised its price inflation forecast, all 6 projections were moved
  higher

• full-year 2025
  core CPI at 2.4% versus 1.9% previously is a big jump, and the BoJ
  added that Japan’s real rate is “significantly low”

• The BoJ said the
  risk to prices was skewed to the topside

• The Bank cited a more positive outlook on
  wage rises

There
was no change to the BOJ’s guidance pledging to keep raising rates:

• “If the outlook presented in the January
  Outlook Report will be realized, the Bank will accordingly continue
  to raise the policy interest rate and adjust the degree of monetary
  accommodation.”

The
yen gained ground on what was a hawkish (for the BoJ) Statement and
set of forecasts. Market expectations are for at least 2 further rate
hikes this year to 1.0% (like I said, at least).

Earlier
in the session Singapore’s
central bank eased its monetary policy settings for the first time
since 2020

The
Monetary Authority of Singapore (MAS) will reduce the slope of its
Singapore dollar nominal effective exchange rate (S$NEER) policy band
“slightly”, while there will be no change to the width of the
band or at the level which it is centred. This is the first time the
central bank has eased its policy since March 2020.

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