ForexLive Asia-Pacific FX news wrap: Japan ‘wholesale’ inflation highest in 16 months

• There are some expectations (minority) of policy change from the MAS in January
• Intervention – Indian central bank likely selling US dollars to limit rupee depreciation
• Taiwan says they will take necessary defence measures re Chinese military activities
• South Korean police raiding Presidential office re coup
• Reports Japan is considering a 4% corporate tax surcharge – to go toward defence spending
• US November CPI data due Wednesday, ranges of estimates (& why they’re crucial to know)
• HSBC expects EUR/CHF to rise to 0.95 (end 2025 view!)
• Japan PPI inflation data recap – persistent rise keeps focus on BoJ rate hike speculation
• PBOC sets USD/ CNY mid-point today at 7.1843 (vs. estimate at 7.2379)
• US admin is considering further sanctions on some Russian oil exports
• Japan’s Q4 Business Outlook Survey presents a mixed bag of results
• ANZ recommends selling AUD/CAD, targeting 0.86
• ADB leaves China economic growth forecasts unchanged at 4.8% (2024) and 4.5% (2025)
• Japan November PPI +0.3% m/m (expected +0.2%) and +3.7% y/y (expected +3.4%)
• Goldman Sachs look for US$3000 gold – lower rates, central bank and investor buying cited
• Reuters Tankan – Japan manufacturing sentiment negative for the first time in 10 months
• Trump’s Bessent says Fed’s “Jay Powell will serve out his term”
• Citigroup forecasts for the S&P 500: Base case of 6500. Bull case 6900. Bear case 5100.
• Forecast for an RBA interest rate cut in Q1 2025 “at the earliest”
• AUD expected to show recovery vs. NZD
• Kiwi Manufacturers Decline in Sales Volume in Q3 2024
• Oil – private survey of inventory shows headline crude oil build vs. draw expected
• Forexlive Americas FX news wrap: USD/JPY rallies for a second day, AUD struggles after RBA
• US November CPI data due Wednesday, December 11 – expected to be higher than in October
• Down day for the major US indices today
• Bank of Canada preview: The storm clouds are gathering in the Canadian economy
• Trade ideas thread – Wednesday, 11 December, insightful charts, technical analysis, ideas

The
yen strengthened during the session here today, dropping from US
afternoon highs above 152.00 to lows towards 151.40. Fingers were
pointed at ‘wholesale’ inflation data. The
PPI data from Japan for November was published by the Bank of Japan.
It showed that inflation
in Japan’s corporate goods prices accelerated to the fastest pace
in 16 months. This
ratcheting higher of price pressures argues, at the margin, for
further BoJ policy normalisation, including rate hikes.

As
an aside there was also a report in Japanese media of a 4% corporate
tax surcharge to fund defence spending. There were some
extrapolations made that if Japan is to fund more of their own
defence (which seems not unreasonable under the incoming Trump
administration) they may sell some of their US government bond
holdings to generate some cash (and buy yen in the process to bring
the funds home). This may have been a factor in the yen bid, but I’d
not be getting too gung-ho on this immediately.

There
was other data from Japan today, Reuters Tankan and Japan’s
Ministry of Finance Business Outlook survey (see bullets above for
details on both) but these are generally not immediate FX market
movers.

The
Indian
central bank, the
Reserve Bank of India, was
likely intervening
today, selling
US
dollars
to limit rupee depreciation.

Major
FX traded in limited ranges (except for JPY) ahead of the US CPI data
due at 0830 US Eastern time today. As a heads up, Andrew Hauser,
Deputy Governor of the Reserve Bank of Australia, is speaking at 6 pm
Sydney time (0700
GMT, 0200 US Eastern time)
at the Australian Business Economists Annual Dinner.
I don’t have a topic for this.

Gold traded above USD2700 briefly.

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