Broad based US dollar weakness remained the underlying theme in Asia on Friday, after markets sold of the US treasury yields alongside dollar in response to a less hawkish speech by Fed Chair Yellen delivered in early Asia. However, the USD selling was short-lived as sentiment improved somewhat on the release of better-than expected Chinese Q4 GDP data, which outpaced expectations of financial expansion.
Looking ahead, we have the UK retail sales report due to be reported in the European session, while from North America, a set of Canadian data, viz., retail sales and CPI is on the cards, besides, Fed official Harker’s speech. However, the main risk event for the financial markets for coming months is expected to be Trump’s inauguration speech scheduled later around 11.30ET.
Main topics in Asia
Fed's Yellen: 'Prudent' to adjust stance of monetary policy gradually
Janet Yellen, chair of the Board of Governors of the Federal Reserve, speaking at the Stanford Institute for Economic Policy Research, notes that it is 'prudent' to adjust the stance of monetary policy gradually
S&P affirms New Zealand's rating, outlook remains stable
The US-based ratings agency, Standard and Poor’s (S&P), published its latest report on Friday, affirming New Zealand’s AA+ sovereign rating.
China's Q4 GDP beats expectations on fiscal expansion
China's YoY GDP figures for the forth quarter of 2016 came at +6.8% vs +6.7% exp and 6.7% previous, with the QoQ reading for Q3 coming at +1.7% vs +1.7% exp and +1.8% last.
PBOC temporarily cuts RRR at 5 big banks by 1ppt for Lunar NY - RTRS
Reuters reports latest announcement from the Chinese central bank (PBOC), citing the bank temporarily allowed lowering RRR at 5 big banks by 1ppt for Lunar New Year.
Key focus for the day ahead
GBP/USD firmer around 1.2360 ahead of data
The greenback has resumed its weekly downside at the end of the week, helping GBP/USD to climb further north of the 1.2300 barrier.
EUR/USD reverses to 1.0670 ahead of Trump’s inauguration
The US dollar reverses a part of Fed Yellen’s comments induced sell-off, exerting downward pressure on EUR/USD, as we head into a data-light EUR calendar.
US: Start of a new era in trade policy? - NAB
Research Team at NAB notes that the trade was one of the key themes of Mr Trump’s campaign and as his inauguration as President nears, attention focuses on what trade policies the Trump administration will pursue.
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