AU hot jobs continue, JPY/USD back to early Dec levels, Trump talk moves markets

- Australian Jan employment continued to stay hot, even as the unemployment rate tracked higher due to an unusually large number of people waiting to start a new job. Annual jobs growth accelerated further to a hot 3.5%, while the participation rate climbed to a fresh record high of 67.3%. Aussie dollar initial rose somewhat, but fell back as yields also stayed flat.

- As UST yields fell overnight (amid the Fed Minutes hinting at an end to the QT process) during the Asia session JPY/USD was up nearly Two Big Figures to 150.30, back to early December levels.

- JGBs quiet today vs recent sessions (<1bp moves in yields; Weaker Japan MOF liquidity enhancement auction saw 2-yr JGB rise back to above 83bps; Some dealers ponder BOJ bond intervention which was last seen in 2023].

- Trump tariff comments were unhelpful to Asia markets. Nikkei underperformed -1.4% also on strong Yen. Trump confirmed he was also thinking of 25% tariffs on lumber imports into the US. [Note: Largest lumber exporters to the US in 2023: 1) Canada $11.5B, 2) China $2.4B, 3) Brazil $1.6B, Chile $1.1B, 5) Vietnam $1.0B, 6) Germany $600-700M] ;

- China offshore Yuan rose back to 1.26 handle after Trump said he would like a new "bigger and better" trade deal with China.

- China PBOC kept LPR rates for Feb on hold.

- US equity FUTs -0.3% during Asian trading.

Looking ahead (Asian time zone)

- Fri 21st AU & JP Flash Feb PMIs, JP Jan National CPI, (Fri night EU & US Flash PMIs).

- Sat 22nd CN Jan FDI (YTD), DE Federal Election.

Holidays in Asia this week

- Mon 17th (Monday night US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,387.

- AUSTRALIA JAN EMPLOYMENT CHANGE: +44.0K V +20.0KE; UNEMPLOYMENT RATE: 4.1% V 4.1%E.

- RBA Dep Gov Hauser: RBA reached 'clear consensus on decision to cut rates.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2027, 2034 and 2041 bonds.

- RBNZ Gov Orr: Feeling more positive about the inflation situation; Expect cash rate to be around 3% by year end - Parliamentary testimony.

China/Hong Kong

- Hang Seng opens -1.0% at 22,176; Shanghai Composite opens -0.1% at 3,347.

- CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: LEAVES 1-YEAR AND 5-YEAR LPR RATE UNCHANGED; AS EXPECTED.

- US President Trump: New trade deal with China is 'possible'.

- China Jan Swift Global Payments (CNY): 3.8% v 3.8% prior.

- China PBOC cash injection eases liquidity and rate pressure - Chinese press.

- China Newspaper said to call tech stock trade 'increasingly crowded' - financial press.

- China Commerce Ministry (MOFCOM) Zhu Bing: Law abiding firms don't have to worry about probes - financial press.

- China Vice Commerce Min Ling Ji: Reiterates external situation is complex, affects FDI to China - Financial press.

- China PBOC to ‘bide its time’ for monetary easing; cites analysts - Yicai.

- Reportedly Trump envisions a "bigger and better" trade deal with China – NYT [overnight update].

- Eli Lilly: If the US Govt's new trade restrictions on China are adopted, it could impact our business and results of operations -10K [overnight update].

- (US) US to 'axe' China based diplomats to cut the size of mission by 10%; cites sources - SCMP.

- China Govt reportedly issues action plan to stabilize foreign investment; Key measures include accelerating mutual visa exemptions, eliminating foreign investment restrictions in manufacturing, and expanding financing options for foreign-funded firms – press [overnight update].

- China Jan FDI YTD Y/Y: CNY: -13.4% v -27.1% prior [overnight update].

- China PBOC sets Yuan reference rate: 7.1712 v 7.1705 prior.

- China PBOC Open Market Operation (OMO): Injects CNY125B in 7-day reverse repos; Net drains CNY0.8B v prior drains CNY19B.

Japan

- Nikkei 225 opens -0.6% at 38,942.

- Japan MOF sells ¥650B v ¥650B indicated in 10-year, 20-year and 30-year JGBs in liquidity enhancement auction; bid-to-cover: 2.46x v 3.76x prior.

- Japan releases weekly flows data [period ended Feb 7th]: Foreign buying of Japan equities: -¥352.8B v -¥384.4B prior; Japan buying of foreign bonds: ¥241.0B v ¥1.76T prior.

- Over 80% of Japanese firms surveyed see Trump policies as 'harmful' to business environment - financial press survey.

- Suzuki Motors +5% on medium-term targets FY2030 Op ¥800B, ¥8.0T Rev; ROE 13%; DOE 3%.

Korea

- Kospi opens -0.4% at 2,661.

- South Korea Feb Consumer Confidence: 95.2 v 91.2 prior.

- South Korea Jan PPI Y/Y: +1.7% v 1.7% prior.

Other Asia

- INDONESIA CENTRAL BANK (BI) LEAVES BI-RATE UNCHANGED AT 5.75%; AS EXPECTED [overnight update].

- Indonesia Central Bank (BI) Gov Warjiyo: Domestic economic growth remains well and needs further push - pre-rate decision press conference [overnight update].

- India Central Bank (RBI) Jan Bulletin: High-frequency Indicators point to sequential pickup in growth momentum in H2 2025 [overnight update].

North America

- Canada Trade Min Ng: Reiterates US adding tariffs on Canada makes 'no sense'; committed to working with the US on issues.

- US Pres Trump: Thinking about 25% tariffs on lumber and forest products, perhaps by Apr 2nd: Confirms talking to China on TikTok - financial press.

- XAI.IPO Musk: Grok 3 now available for free; X premium+ and Supergrok users will have increased access to Grok 3 - Press.

- (US) President Trump: Will 'check and ensure' the Fort Knox gold supply is 'accurate' (Said to have last been checked >50 year ago) - financial press.

- (US) Commerce Sec Howard Lutnick: Interest rates are going to come down; Trump's goal is to abolish the IRS, and let 'outsiders play' - financial press.

- (UR) Trump Admin said to consider revised and simplified minerals deal with Ukraine - financial press, citing sources.

- (US) Fed's Goolsbee (voter): Inflation has come down, but it is still too high - press interview.

- US Pres Trump: Committed to making America the crypto capital; Comments on various economic issues - Florida event.

- US Pres Trump said to be in the planning stages to sign an EO to eliminate, or dramatically diminish, a handful of Federal advisory committees – press.

- (US) Reportedly Trump Administration tells Pentagon to develop plan for 8% budget cut in each of the next 5 years - Washington Post.

- (US) Fed's Jefferson (voter): Best thing Fed can do is achieve its dual mandates on inflation and employment.

- (US) January US Net trailer orders 23.96K units, -2% m/m, +81% y/y - FTRintel.com.

- (US) MBA Mortgage Applications w/e Feb 14th: -6.6% v 2.3% prior.

- (US) JAN HOUSING STARTS: 1.366M V 1.390ME; BUILDING PERMITS: 1.483M V 1.460ME.

- (US) Feb New York Fed Services Business Activity: -10.5 v -5.6 prior.

- (US) Pres Trump: The House and Senate are doing a SPECTACULAR job of working together as one unified, and unbeatable, TEAM, however, unlike the Lindsey Graham version of the very important Legislation currently being discussed, the House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it.

- (CA) Canada PM Trudeau: We are entirely focused on ensuring there are no tariffs placed on Canada; If they are, our response will be immediate and strong, but we don't want that.

- (US) Pres Trump may use public health order to limit immigration via US-Mexico border - CNN.

- (US) JAN FOMC JAN MINUTES: CAN KEEP POLICY AT RESTRICTIVE LEVEL IF THE ECONOMY IS STRONG; Might need to pause QT until debt limit is resolved.

- (US) Reportedly Trump Administration tells Pentagon to develop plan for 8% budget cut in each of the next 5 years - Washington Post.

Europe

- (EU) ECB's Schnabel (Germany): Direction of travel for rates is not clear anymore; getting to the point where Council should consider pause or even halt rate cuts - FT.

- (IL) Israel Feb 12-month CPI Forecast: 2.4% v 2.7% prior.

- (EU) EU reportedly looks at tapping €93B in unspent COVID recovery funds for defense - FT.

- (RU) Russia Pres Putin: Confirms diplomatic missions' work between US and Russia to be resumed.

- (DK) Denmark PM Frederiksen: Country to spend additional DKK50-60B (~$7-8.4B) on defense in 2025-26; Will ease fiscal policy to finance military.

- (US) EU Trade Commissioner Sefcovic: 'Nothing unfair' about trade with the US; Will tell the Trump administration that the EU is interested in making mutually beneficial deals.

Levels as of 00:20 ET

- Nikkei 225 -1.4%, ASX 200 -1.2%, Hang Seng -1.0%; Shanghai Composite flat; Kospi -0.9%.

- Equity S&P500 Futures -0.3%; Nasdaq100 -0.4%; Dax +0.4%; FTSE100 -0.6%.

- EUR 1.0419-1.0438; JPY 150.19-151.47; AUD 0.6328-0.6367; NZD 0.5694-0.5722.

- Gold +0.8% at $2,960/oz; Crude Oil -0.4% at $71.78/brl; Copper +0.2% at $4.5805/lb.