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European natural gas prices fell 1.3% to EUR 49.60 on Friday after a high of EUR 50.40 followed by a low of EUR 49.36 to end the week still up 3.3% as freezing weather impacts northern Europe. Russian flows through Ukraine ceased on Wednesday.

• Austria’s Gas Grid Management stated that flows through Germany and Italy have been sufficient to replace the end of Russian gas following a contract dispute with Gazprom stopped shipments.
• Europe’s competition for global supplies with Asia is likely to intensify this year with the end of Russian flows through Ukraine. In 2024, Asia’s LNG imports rose 7.3% to a record driven by China and India, based on ship-tracking data from Bloomberg. While to Europe they fell around 20%.
• US gas prices fell sharply as forecasts signal that severe wintery weather will ease across the Midwest and east coast of the US around mid-January and output picked up driven by higher prices. Henry Hub was down 8% to $3.37, lowest since December 27, to be down slightly on the week.
• The election of Trump as the next US President has increased expectations that US fossil fuel production will rise. However, before the end of his term President Biden is likely to ban new offshore oil and gas projects covering around 625mn acres of coast, according to Bloomberg. The area includes the Atlantic, Pacific and eastern Gulf of Mexico. The decision is likely to be announced today.

USD/JPY tracks slightly firmer in early Monday dealings, the pair last near 157.45/50. Friday's session delivered a modest 0.15% gain for yen, as broader USD gains experienced a consolidation. Yen lagged other G10 currencies though (except against CAD). For USD/JPY, we track within ranges seen in 2025 so far, with recent highs at 157.85. Late 2024 highs in the pair were just under 158.10. 

• The broader technical backdrop is still considered supportive for the pair, with moving average studies still in bull mode. A clear break above 158.00 could see the July 12 high of 159.45 targeted. On the downside, the 20-day EMA support zone is sub 156.00.
• Japan markets return today after being out for the final 3 days of last week. The local data calendar just has Dec PMI revisions on tap today. On Thursday Nov labor cash earnings data is released, which will be of greater focus.
• The generally firmer US yield backdrop, more so at the back end of the curve, likely supported USD/JPY dips through the tail end of last week. Yield differential trends are sit below late 2024 highs though for the 2yr and 10yr differential. The rise in US equities on Friday likely weighed on yen against key crosses, but AUD/JPY is still sub 98.00. 

TYH5 is 108-16+, -0-04 from NY closing levels. 

• Tsy futures finished last week near session lows following the December manufacturing ISM survey, which beat expectations. The headline reading of 49.3 improved from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
• This week, US economic data and Treasury supply are being brought forward to accommodate Thursday's "day of mourning" to honour President Carter. The Federal holiday sees most markets closed; the exception so far is CME rates, which will operate on a shortened session.
• Thursday's weekly jobless and continuing claims will be released on Wednesday according to the Dept of Labor site.