ForexLive Asia-Pacific FX news wrap: RBA rate hike as expected, fuel for the AUD. | Forexlive

• Australian dollar jumped higher after the Reserve Bank of Australia +25bp rate hike
• Australia – RBA raises the cash rate by +25bp to 3.35%, as expected
• A magnitude 5.6 earthquake has hit central Turkey
• Bank of Canada Governor Macklem speaking Tuesday, 7 February 2023
• USD losing ground in Asia trade
• European Central Bank speakers due on Tuesday, 7 February 2023: Kazamir, Knot, Schnabel
• Bank of England speakers coming up on Tuesday, 7 February 2023: Ramsden, Pill, Cuncliffe
• US President Biden’s State of the Union address is due Tuesday 07 February 2023
• PBOC sets USD/ CNY reference rate for today at 6.7967 (vs. estimate at 6.7962)
• Japan finance minister Suzuki speaking on FX (USD/JPY) intervention
• Australian trade data for December, exports down, imports up m/m
• UK retail sales rise in January, BRC and Barclaycard data
• New Zealand January ANZ Commodity Price Index comes in at -1.0% m/m (prior -0.1%)
• Japan’s Ministry of Finance confirms “stealth” USD/JPY intervention
• Japan data – December total cash earnings rise the most y/y since January 1997
• Morgan Stanley looking to the February US NFP, says another 500K puts +50bp on the table
• Australia weekly consumer confidence survey slumped 3.2% w/w to 83.6
• ICYMI – Fed’s Bostic says interest rates may need to rise higher than he thought
• Forexlive Americas FX news wrap 6 Feb: The dollar rise continues. Yields up. Stocks lower.
• Goldman Sachs sees a 25% probability of the US entering a recession in the next 12 months
• US President Biden says the risk of a US recession is still very low
• US indices closed lower on the day. S&P index stays above the 4100 level.

The
Reserve Bank of Australia raised its cash rate by 25bp today to
3.35%. It was the ninth hike in a row (the Bank did not meet in
January, holiday time). The Australian dollar had been rising all day
ahead of the decision announcement, but that was largely a weaker USD
with NZD, GBP, yen, CAD all higher. EUR was up but lagging behind its
peers. After the rate hike statement AUD/USD jumped toward 0.6950 to
its session high (so far, at least) before stabilising circa 0.6940
(as I post).

The
Reserve Bank of Australia statement was hawkish, saying the Bank
expects more rate hikes (plural) to come and forecasting inflation to
fall to the top end of the Bank’s target band (2 to 3%) only in
2025.

From
Japan today we had confirmation from the Ministry of Finance (MoF) of
what it referred to as “stealth” forex intervention in USD/JPY
back in October 2022 (on the 21^st
and 24^th).
You’ll be aware that intervention operations in Japan are undertaken
by the Bank of Japan acting under the instruction of the MoF. The BOJ is
not independent in this aspect of its operations. After the MoF
“stealth” announcement Minister Suzuki was out with comments,
saying the usual “important for forex rates to move stably,
reflecting economic fundamentals” and such. He had what I think was
his desired impact, of sending USD/JPY lower on the session after its
jump on Monday. Also from Japan today were wages data. the y/y rise in December data was the best in 25+ years. The caveats were that;

• much of this rise was a result of bonus payments, not base pay rate gains,
• and that ‘real’ wages only rose by 0.1% y/y. It was, however, the first real wage gain in nine months.

From
China today we had Baidu announcing it’d be launching an AI tool
similar to OpenAI’s ChatGPT. Baidu’s machine will be named “ERNIE
Bot”. Despite this name, Baidu’s shares jumped higher, 13+% the
last time I checked.

Still ahead for Tuesday are central bank speakers from the Bank of England, the European Central Bank, and the Bank of Canada. And, of course, the big guy, Federal Reserve System Chair Powell (1240 US ET, which is 1740 GMT).

Asian
equity markets:

• Japan’s
  Nikkei 225 +0.16%

• China’s
  Shanghai Composite +0.33%

• Hong
  Kong’s Hang Seng +1%

• South
  Korea’s KOSPI +0.6%

• Australia’s
  S&P/ASX 200 -0.3%