RBA seen to hike next week on hotter AU CPI
|Asia market update: RBA seen to hike next week on hotter AU CPI; ID equities suffer on MSCI freeze; Focus on FOMC tonight amid weak USD.
General trend and developments
- Hotter Aussie CPI saw RBA 25bp rate hike probabilities for next week (Feb 3rd) spike to 73%, with a further 25bp increase expected later in 2026.
- Dollar weaker to four-year lows on Trump comments that he “is not concerned“ about the Dollar’s decline, but the greenback recovered against somewhat all crosses during the Asia session. Reminder FOMC rate decision tonight Asia time.
- Indonesia shares plummeted 7% on news that MSCI to immediately apply an interim freeze for Indonesia stock index changes.
- Korea chipmaker Hynix saw further fresh record highs ahead of tomorrow’s earnings and reports of winning 2/3 of HBM4 chip supply to Nvdiia.
- China PBOC continued to set higher Yuan fixes back to levels of May, 2023. Prior to the fix offshore Yuan hit 6.93 vs USD but the dollar recovered to 6.94 after the fix in line with the broader USD recovery during the Asia session.
- Japan’s bi-monthly 40-year JGB auction was again well bid, with the Japanese yield curve heading lower across the board. 40-year JGB yields -3.5bps post-auction after being flat early in the session.
- Korean Won continued to gain strength up to 1,423 vs USD, highest since October last year amid strong foreign inflows, comes as the Kospi saw another fresh record high.
- Hang Seng outperformed Asia, +2.3%.
- US AI corporate services provider Anthropic raised its revenue forecasts for both this year and next (up to $55Be for 2027).
- US equity FUTs 0.3% to 0.6% during Asia trading.
Looking ahead (Asian-weighted focus, using Asian time zone)
- Wed Jan 28th (Wed night US FOMC).
- Thu Jan 29th NZ Dec Trade Balance, NZ Jan ANZ Business Confidence, SG MAS Policy Statement, PH Q4 GDP, JP Jan Consumer Confidence.
- Fri Jan 30th JP Jan Tokyo CPI, JP Dec Industrial Prod & Dec Retail Sales, AU Q4 PPI, (Fri eve DE, EU Q4 Flash GDP, US Dec PPI).
- Sat Jan 31st China Jan NBS Manufacturing PMI, KR Jan Exports.
Holidays in Asia this week
- Mon Jan 19th Australia, India.
- Wed Jan 28th Malaysia.
- Thu Jan 29th Malaysia.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.3% at 8,971.
- Australia Dec CPI M/M: 1.0% v 0.0% prior; Y/Y: 3.8% v 3.6%E.
- Australia Q4 CPI Q/Q: 0.6% v 0.6%E; Y/Y: 3.6% v 3.4% prior.
- New Zealand Dec filled jobs M/M: 0.0% v 0.5% prior.
- Follow Up on Australia Dec CPI data: Annual Services inflation was 4.1 per cent in the 12 months to December, up from 3.6 per cent to November. The main contributors were Domestic holiday travel and accommodation (+9.6 per cent) and Rents (+3.9 per cent).
- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 84.0 v 79.3 prior (update).
- ANZ bank now sees RBA raising by 25bps on Feb 3rd.
- Australia RBA rate hikes reported to now 'firm' as Dec and Q4 core inflation rises - Australia press.
- New Zealand PM Luxon: Collins won't stand in 2026 election.
- New Zealand Fin Min Willis: RNBZ will be 'easing off accelerator' at some point - comments in parliament.
- New Zealand Fin Min Willis: Will be delivering budget on May 28th; There'll be 'Splashing the cash' in this budget.
- New Zealand RBNZ sold net NZ$259M in Dec.
China/Hong Kong
- Hang Seng opens +0.7% at 27,325.
- Shanghai Composite opens +0.3% at 4,150.
- China Defense Min: Willing to improve capability with Russia to respond to various risks and challenges.
- China PBOC Open Market Operation (OMO): Injects CNY378B; Net injects CNY14B v injects CNY78B prior.
- China MOF sells 1-month deposits at 1.73% v 1.73% prior.
- China Development Bank issues first policy-bank bonds in Macau.
- USTR Greer: Chinese EVs won't enter US from Canada without a heavy tariff - Fox Business.
Japan
- Nikkei 225 opens -0.6% at 53,023.
- Japan sells ¥400B vs. ¥400B indicated in 40-year bonds; yield at lowest acceptable price: 3.720% v 3.5550% prior; bid-to-cover: 2.76x v 2.59x prior.
- Japan Fin Min Katayama: Will take action in line with US-Japan FX agreement and take appropriate steps on coordinating with US.
Korea
- Kospi opens +1.2% at 5,145.
- South Korea Dec Retail Sales Y/Y: 4.4% v 4.2% prior- US Pres Trump: We'll work something out regarding South Korea tariff threat.
- US Pres Trump: We'll find a solution with South Korea.
- South Korea to spend KRW2.4T on ‘AI transformation’ in public sector – Yonhap.
- South Korea stock market surpasses German stock market in market cap, at $3.25T.
- North Korea said to test large-caliber multiple launcher system - press.
Other Asia
- (IL) Reportedly US Pres Trump will be granted broad powers over Gaza by Board of Peace - NY Times cites draft plan.
- (IL) Israel PM Netanyahu: Intention is to move from aid to partnership with the US.
- (ID) MSCI to apply interim freeze for Indonesia stock index changes; Effective immediately.
- (IN) Reportedly India has halted China's request for a new dispute panel surrounding India's market regulations for the EV and renewable energy sectors - press cites WTO official.
- (IR) Iranian Pres: Tehran has always welcomed and still welcomes any progress to prevent a war - press citing call with Saudi Crown Prince.
- (SL) Sri Lanka Central Bank (CBSL) leaves Overnight Policy Rate (OPR) unchanged at 7.75%.
- (SY) Reportedly Pres Trump said US is prepared to back reconstruction in Syria during call with Syrian Pres today - Syrian press.
- (ID) Indonesia Benchmark Stock Index declines by 6.9% after move by MSCI.
- (TH) Thailand sells total THB45B in 3-year and 15-year bonds.
North America
- (US) Nov FHFA house price index M/M: 0.6% v 0.3%E.
- (US) Nov S&P cotality house price index (20-city) M/M: 0.47% v 0.22%E; Y/Y: 1.39% v 1.20%E.
- (US) Jan consumer confidence: 84.5 v 91.0E.
- (US) Jan Richmond FED manufacturing index: -6 v -7 prior.
- (US) Treasury $70B 5-year note auction draws 3.823% v 3.747% prior, BTC 2.34 v 2.35 prior and 2.39 over the last 12 auctions.
- (MX) Mexico Dec Trade Balance (MXN): $2.4B v $2.5Be.
- (US) President Trump: Affirms will announce Fed Chair selection 'soon'.
- (US) Pres Trump: Big armada is going to Iran, hopefully we won't have to use it - comments on radio show.
- (US) Reportedly US will soon issue a general license that removes some sanctions on the Venezuela oil industry - press.
- (US) Reportedly US is working to issue general license lifting some sanctions on Venezuelan oil industry - press.
- (US) US Intelligence report said to have raised 'doubts' related to Venezuela interim President Rodriguez - Press.
- (US) ADP Preliminary Employment Change for 4-weeks ending Jan 9th: +7.75K v +8.0K prior.
- (US) Weekly Redbook LFL Sales w/e Jan 24th: +7.1% y/y; Jan MTD: +6.1% y/y.
- (US) Treasury to sell $105B 4-week bills and $95B 8-week bills roadband to 10 MHz [at February 18th meeting].
- (US) Weekly API Crude Oil Inventories: -0.2M v +3.0M prior.
- (US) NY Fed takes $1.3B (prior: $1.5B) in RRP program at 3.50%; 5 participating and accepted counterparties.
- (US) US Intelligence report said to have raised 'doubts' related to Venezuela interim President Rodriguez - Press.
- (CA) Canada PM Carney: Had good conversation with US Pres Trump (yesterday) - comments to media in Ottawa.
- (CA) Canada PM Carney: Formal review of the USMCA treaty will begin in a few weeks.
- (MX) Mexico Central Bank (Banxico) 2026 Monetary Program: New taxes and tariffs will challenge monetary policy; See weak investment until at least H2 2026.
Europe
- (DE) Germany sells €4.633B vs. €6.0B indicated in new Mar 2028 schatz; avg yield: 2.14% v 2.11% prior; bid-to-cover: 2.11x v 1.93x prior.
- (HU) Hungary Central Bank (MNB) leaves base rate unchanged at 6.50%; as expected.
- (EU) EU Commission: Still expect to propose Russia oil ban by end-2026; Do not have timeline for Russia nuclear ban.
- (UK) Treasury Min Tomlinson: Govt will review the way hotels are valued for business rates; Govt wants to go further to support pubs.
- (UK) Various company execs from Airbus, AstraZenea, HSBC said to join UK PM Starmer's trip to China - financial press.
- (UK) UK PM said to delay decision on Chinese built wind farm factory - Times.
- (TR) Turkey Pres Erdogan: Central bank (CBRT) reserves exceed $200B for first time.
Levels as of 00:20 ET
Nikkei 225 -0.5%; ASX 200 -0.1%; Hang Seng +2.4%; Shanghai Composite +0.6%; Kospi +1.7%.
Equity S&P500 Futures +0.3%; Nasdaq100 +0.6%; DAX -0.1%; FTSE100 +0.6%.
EUR 1.2046-1.1975; JPY 0.6570-0.6533; AUD 0.7023-0.6980; NZD 0.6045-0.6008.
Gold +1.4% at $5,254/oz; BTC +0.4% at $88,909, Crude Oil +0.7% at $62.80/bbl; Copper +0.5% at $5.9798/lb.
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