Japanese Yen Benefits From Falling Asian Stocks

Market Reviews

On currency markets, the Japanese yen strengthens broadly amid tumble of Asian stocks. New Zealand dollar and euro are trading as the next strongest. Australian dollar is mixed after RBA stands pat. US dollar is trading as the weakest one, pressured by falling US yields. 30 year yield closed down -0.033 at 3.278 while 10 year yield closed down -0.021 at 2.992. Canadian dollar and British pound are also weak.

On stock markets, DOW closed up 1.13% at 25826.43 overnight. S&P 500 added 1.09% and NASDAQ gained 1.51%. In Asia, Nikkei closed down 2.39% at 22036.05, Hong Kong HSI fell 0.37%, Singapore Strait Times lost 1.12%, but China SSE added 0.10%.

As widely expected, RBA left the cash rate unchanged at 1.5% for the 26th consecutive meeting. Policymakers remained upbeat about economic developments, suggesting that the economy is expected to “continue to grow above trend” and “a further reduction in the unemployment rate is likely”.

In his speech, Federal Reserve Chairman Jerome Powell said that despite solid economic progress, the country still faces a number of challenges ranging from slow wage-growth for lower-income workers to sluggish productivity and an aging population. Jerome Powell also said that Fed has made “great deal of progress towards” a “strong economy and sound financial system”. He pointed to unemployment rate at 3.7% and strong job creation.

The White House has confirmed that Trade Representative Robert Lighthizer will lead the new round of trade talks with China, taking over from Treasury Secretary Steven Mnuchin. Over the weekend, the leaders of the world's largest trading partners struck a temporary truce, with Trump agreeing to maintain the 10% tariffs on $200 billion worth of Chinese goods, and not raise them to 25% "at this time," ahead of a January 1 deadline.

The Eurogroup said Italy’s 2019 Draft Budget Plan (DBP) was breaking EU rules and urged Italy to rectify it. The Eurogroup recalls that in its opinion issued on 23 October 2018 the Commission identified a particularly serious non-compliance with the recommendation addressed to Italy by the Council on 13 July 2018 and requested a revised DBP.