SOUTH KOREA: Consumer Confidence Up, Though Pessimism Still in Charge. 

USD/CNH fell over 1% for Monday's session. We track near 7.2600 in early Tuesday dealings, levels last seen in the first half of Dec 2024. Sentiment was aided by no early tariff announcements from the returning Trump administration. Broader USD indices lost over 1%. 

• Onshore USD/CNY spot fell back to 7.2731, leaving a negative USD/CNH-USD/CNY bias, so we could see more downside for spot today. the CNY CFEST basket tracker edged up 0.11% to 101.46, but remains within recent ranges.
• The Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. Trump officials later corroborated the reports. It was also reported that China would be investigated around trade policies and whether it adhered to the trade deal the previous Trump administration enacted with China (see this BBG link).
• For USD/CNH technicals, we are back sub the 50-day EMA (after breaking below the 20-day yesterday). The 100-day is around 7.2466 in terms of further downside targets, the 200-day is close to 7.2210. The 50-day is back higher, close to 7.2875.
• Focus will rest on US-China relations, with CNH to remain very sensitive to any tariff related sentiment and any shift in Trump's position. Broader macro developments such as elevated US-CH yields and still positive US growth momentum could help keep USD/CNH dips supported, but further positioning adjustments may occur in the near term, with the near term tariff threat seemingly lowered.  
• The local data calendar is empty today. 

In local morning trade, NZGBs are 3bps richer across benchmarks. Due to Martin Luther King Day, there was no cash US tsy trading yesterday but futures were stronger.

• Swap rates are 2bps lower.
• NZ’s Performance of Services Index fell 1.2% m/m to 47.9 in December.
• NZ Retail Card Spending rose 2% m/m in December versus a revised +0.1% in November.
• However, the week's focus will be tomorrow’s Q4 CPI data which is forecast to show moderation in headline and non-tradeables inflation.
• Headline returned to the RBNZ’s 1-3% band in Q3 and is expected to ease 0.1pp to 2.1% y/y, posting a 0.5% q/q rise in Q4. The RBNZ forecasted 0.4% q/q & 2.1% y/y in November. Non-tradeables are projected to rise 0.8% q/q, resulting in the annual rate moderating to around 4.7% y/y from 4.9%.
• November net migration prints on Thursday. Initial readings have tended to be revised down over H2 2024 as immigration slows. The softening labour market has discouraged people moving to NZ and encouraged New Zealanders to shift to Australia.
• RBNZ dated OIS pricing is little changed. 45bps of easing is priced for February, with a cumulative 106bps by November 2025.

• The NZD/USD surged 1.63% to 0.5676 on Monday as the USD saw substantial weakening, as reports from the Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. The BBDXY fell 1.10% to 1,301.67.
• The pair surged above initial resistance at 0.5634 (20-day EMA), however fell short of breaking above the yearly highs of 0.5693 (Jan 7 highs), the RSI is above 50 for the first time since early October, while the MACD is printing increasing green bars. Focus will now be on breaking the Jan 7 highs, a break here would open a move to test the 50-day EMA at 0.5734, a level we have no traded above since Oct 4. Initial support is 0.5563 (Jan 17 lows).
• New Zealand's PSI fell to 47.9 in December, marking its 10th consecutive month in contraction. All five sub-indexes, including inventories and deliveries, dropped below 50, with the sales/activity measure at 46.2. The number highlighting ongoing weak activity and suggesting downside risks to near-term growth forecasts when combined with the PMI.
• Today's expiries include; 0.5635 (NZD349.1m), 0.6050 (NZD348.2m), 0.5660 (NZD328.6m). Upcoming notable strikes: 0.5675 (NZD500.4m Jan. 23), 0.5475 (NZD450m Jan. 22)
• RBNZ dated OIS pricing cooled 1-3bps on Monday with a 84.5% chance of a 50bps cut in Feb, with 71.5bps of cumulative cuts priced by April, while the November meeting has a total of 110bps of cuts priced.
• The NZ-US 2yr swap saw a sharp reversal last week, hitting a low of -94.5bps, we last trade at -67.5bps.
• Later we have Non Resident Bond Holdings data, however focus is largely on Tomorrow's CPI data.