BoJ holds – Greenland political tensions simmer but markets sanguine

Asia market update: BoJ holds; Greenland political tensions simmer but markets sanguine; CN Yuan fix stronger than 7.0 first time since 2023.

General trend and developments

- Bank of Japan held rates, as expected, with just board member Takata dissenting for a 25bps hike to 1.0%. Japanese yield curve continues to flatten at both ends, following the Tuesday explosion at the long-end. Gov Ueda presser to start from 01:30am.

- [US-EU-Greenland Update: Diplomatic tensions and peace efforts are colliding at the Davos summit as the U.S. and Russia move closer to a deal to end the war in Ukraine. U.S. envoy Steve Witkoff believes negotiations are in their final stages and is traveling to Moscow tonight to meet with President Putin, who has described the recent talks as "constructive." However, this progress is being overshadowed by a trade dispute: France and the EU are outraged over President Trump's threat to place massive taxes on French champagne, calling it "blackmail" used to force them into his other foreign policy plans. While NATO leaders are also focusing on new security cooperation in Greenland, they remain cautious, insisting that Ukraine must remain the top priority until a final peace is actually reached].

-Little movement in Asian equities today after big moves earlier in the week.

-Despite New Zealand's hotter than expected Q4 CPI figures today No signs of hawkish-ness from RBNZ Gov Breman in comments today, following a series of better data out of New Zealand in recent weeks. Still believes have favorable conditions to meet mid-point of inflation target.

-China PBOC set the Yuan fix stronger than 7.00 for the first time since 2023.

-Reserve Bank of Australia (RBA) rate hike chances jumped from 30% to 60% following the hotter jobs numbers and lower unemployment yesterday.

-Pres Trump claimed to have China’s Pres Xi’s approval for the Tiktok-USA deal, after the JV announcement was consummated with USDS.

-Intel -11% after hours following a bad miss to Q1 earnings guidance with reduced gross margins.

-US equity FUTs +0.2% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

- Fri 23rd (Fri eve UK Dec Retail Sales).

Holidays in Asia this week

- Mon Jan 19th US market holiday.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.0% at 8,848.

- Australia Jan preliminary PMI manufacturing: 52.4 v 51.6 prior [3rd month of expansion].

- New Zealand Q4 CPI Q/Q: 0.6% v 0.5%E; Y/Y: 3.1% v 3.0%E.

- Reserve Bank of New Zealand (RBNZ) Q4 Sectoral Factor Model Inflation Index Y/Y: 2.8% v 2.7% prior.

- (RBNZ) Gov Breman: Still have favorable conditions to meet mid-point of inflation targe.

China/Hong Kong

-Hang Seng opens +0.2% at 26,751; Shanghai Composite opens +0.14% at 4,126.

- China reportedly encourages M&A among drug retail firms; Seeks to drive pharma industry development - press.

- China Pres Xi: China willing to cooperate with Brazil in different areas - message to Brazil Pres Lula, reported by Chinese state media.

- China rural banks said to be unable to find buyers for foreclosed properties - financial press.

- China Ministry of Finance (MOF) sells 3-year and 5-year bonds.

- Certain issuers in China have been electing to issue short-dated convertible bonds in order to take advantage of loophole related to offshore debt issuance - financial press.

- Hong Kong Dec CPI Composite Y/Y: 1.4% v 1.2%e.

- China PBOC sets Yuan reference rate: 6.9929 v 7.0019 prior (first time to be set stronger than 7.00 vs USD since 2023).

- China PBOC Open Market Operation (OMO): Injects CNY125B; Net injects CNY38B v injects CNY31B prior.

Japan

- Nikkei 225 opens 0.1% at 53,327.

- Japan Dec national CPI Y/Y: 2.1% v 2.2%E; CPI (ex-fresh food) Y/Y: 2.4% v 2.4%E.

- Japan Jan preliminary PMI manufacturing: 51.5 v 50.0 prior (1st expansion in 7 months; Highest level since Aug of 2022).

- Bank of Japan (BOJ) leaves target rate unchanged at 0.75%; As expected.

- Bank of Japan (BOJ) quarterly outlook for economic activity and prices (aka staff projections).

- Japan supermarket lobby said to be calling for a 5-year reduction in tax - press.

- Japan Fin Min Katayama: Details of planned sales tax cut have not been decided; bond market 'rout' appears to have receded - financial press.

- Japan Lower House dissolved ahead of Feb 8th snap election - press.

Korea

- Kospi opens +1.2% at 4,987.

- South Korea reportedly to provide KRW400B in financial support for Korea shipbuilding industry - Yonhap.

- South Korea sells KRW1.3T vs KRW1.3T indicated in 1-year bonds: Avg Yield 2.76%.

Other Asia

- Malaysia central bank (BNM) leaves overnight rate unchanged at 2.75%; as expected.

- Malaysia mid-Jan Foreign Reserves: $125.6B v $125.5B prior.

- Singapore Dec CPI M/M: 0.3% v 0.2%e; Y/Y: 1.2% v 1.2%e.

- Singapore Q4 Final URA Private Home Prices: 0.6% v 0.7% prelim.

- Taiwan 'chips away' at China spying - WSJ [update].

- Taiwan Dec Unemployment Rate: 3.4% v 3.4%e.

- Indonesia Dec M2 Money Supply Y/Y: 9.6% v 8.3% prior.

- Thailand Dec Customs Trade Balance: -$0.35B v -$2.6Be; Exports +16.8% v 8.0%e.

North America

- US Q3 Final GDP Annualized Q/Q: 4.4% v 4.3% prelim; Personal Consumption: 3.5% v 3.5% prelim (UPDATE).

- US Nov Personal Income: 0.1% v 0.4%e; Personal Spending: 0.5% v 0.3%e (UPDATE).

- US Q3 Final GDP Price Index: 3.8% v 3.8% prelim; Core PCE Price Index: 2.9% v 2.9% prelim (UPDATE).

- US Nov PCE Price Index M/M: 0.2% v 0.2%e; Y/Y: 2.7% v 2.7%e (UPDATE).

- US Government funding package is on track to pass the House - press.

- US House defeats resolution that would have limited Pres Trump's war powers - press.

- President Trump: Venezuelan oil will be divided up; We will start drilling very soon.

- President Trump affirms 25% tariff on 'anyone dealing with' Iran will take effect shortly.

- President Trump: Finished interviewing for the Fed Chair position; Have someone in mind and will be disclosed soon.

- President Trump: The people who brought the Tariff Litigation against our Country, now in the United States Supreme Court, are strongly China oriented.

- (CA) Canada Jan CFIB Business Barometer: 59.5 v 59.9 prior.

Europe

- (EU) Commission's Tech Chief Virkkunen: Investing in European gigafactories to compete globally - Davos.

- (NL) Netherlands Jan Consumer Confidence: -23 v -21 prior.

- (NO) Norway Central Bank (Norges) leaves deposit rate unchanged at 4.00%; As expected; Reiterates not in hurry to cut rates; Will cut further during 2026.

- (UK) Reform Party leader Farage: Want to reduce size of the state and cut taxes; Banks aren't going to get free money any more via quantitative easing - Davos.

- (UK) Jan GfK Consumer Confidence: -16 v -16e [highest since Aug 2024].

- (PL) Poland Dec PPI M/M: -0.4% v -0.2%e; Y/Y: -2.5% v -2.3%e.

- (RU) Russia Govt Spokesperson Peskov: Haven't lost hope to recover frozen reserves.

- (IE) Ireland Dec PPI M/M: -0.6% v 0.0% prior; Y/Y: -6.4% v -5.3% prior.

Levels as of 00:20 ET

Nikkei 225 +0.3%; ASX 200 +0.3%; Hang Seng +0.4%; Shanghai Composite +0.4%; Kospi -0.5%.

Equity S&P500 Futures +0.2%; Nasdaq100 +0.2%; DAX +1.2%; FTSE100 +0.1%.

EUR 1.1759-1.1743; JPY 158.74-158.36; AUD 0.6853-0.6836; NZD 0.5927-0.5906.

Gold +0.4% at $4,956/oz; BTC -0.1% at $89,882, Crude Oil +0.8% at $59.82/bbl; Copper +0.6% at $5.8383/lb.