ForexLive Asia-Pacific FX news wrap: Trump tariffs remarks trigger USD jump

• China’s will roll out a new round of growth initiatives for 10 key industries
• New Zealand inflation data today has pricing for an RBNZ 50bp rate cut at around 67%
• Poll shows 18 out of 19 economists expect a Bank of Japan rate hike on Friday
• Japanese Labor Talks Forecast Big Wage Hikes; BOJ Interest Rate Decision Looms
• ECB President Lagarde speaking Wednesday. Villeroy and Knot also.
• Internet cables to Matsu Islands (Taiwan) have been severed
• RBNZ’s own preferred inflation model 3.1% y/y for Q4 2024 (prior 3.4%)
• Japan PM Ishiba will speak this week – to highlight pay hikes
• China’s long new year holiday is coming up, PBOC beginning to inject funds
• PBOC sets USD/ CNY mid-point today at 7.1696 (vs. estimate at 7.2642)
• Japan’s largest union boss agrees with BoJ that there is wage rise momentum
• Chinese Vice Premier Ding Xuexiang warned Tuesday that trade wars end with “no winners”
• Goldman Sachs on Trump tariffs – “more benign than expected”, but some of it hawkish
• Meta expands wearable tech lineup with Smart Glasses, AI-Enhanced devices to rival Apple
• Australian Leading Index shows “more modest momentum”
• UBS CEO sees sticky inflation, tariff risks – “don’t see rates coming down as fast”
• USD higher after Trump threatens EU, China with tariffs
• Trump says European Union will be in for tariffs
• Trump says talking about a 10% tariff on China
• Trump open to Musk buying TikTok
• Trump announces AI project – Stargate to build infrastructure, beginning immediately
• New Zealand Q4 2024 CPI slightly higher than expected
• Trade ideas thread – Wednesday, 22 January, insightful charts, technical analysis, ideas
• Major US stock indices start the week with solid gains
• Trump wants an early renegotiation of trade deal with Canada and Mexico
• Netflix beats on EPS and revenues. United Airlines beats as well
• Netflix and United earnings after the close

Welcome
to today’s edition of Trump tariff
talk watch!
It sure seems that way. Major FX was subdued until Trump dropped
tariff remarks again. He said the EU ‘treats us badly’ and that
tariffs are on the way for them. EUR/USD dropped from around 1.0425
to lows under 1.04. Other FX dropped alongside, to various degrees.
Trump had earlier reiterated the threat of a 10% tariff on China, as
early as February 1, and also that he wants to renegotiate his trade deal with Canada and Mexico.

Leaving
the US behind and crossing the Pacific we had inflation data from New
Zealand, both the official reading and the Reserve Bank of New Zealand’s
own data.

• The
  official data, from StatsNZ showed q/q CPI at 0.5% but a slight tick
  above expectations for the y/y at 2.2% (2.1% expected). Non tradable
  inflation dropped.
• From
  the Reserve Bank of New Zealand, its preferred model dropped from
  3.4% y/y in Q3 to 3.1%. While 3.1% is still above the top of the
  Bank’s 1 – 3% target band the decent sized drop will encourage
  the Bank to continue cutting rates. Indeed, market pricing firmed for
  a 50bp rate cut at the next meeting on February 19.

NZD/USD
dribbled lower on the session, towards 0.5650 and is circa 0.5660 as
I update.

USD/JPY
tracked to highs above 155.90 and its ebbed a little to around 155.78
as I post. There was little fresh news from Japan today.

Gold
climbed back above US$2750.

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