MNI EUROPEAN OPEN: USD/JPY To Fresh Multi Month Lows

EXECUTIVE SUMMARY

• FED CAN TAKE TIME ON NEXT RATE CUT - JEFFERSON - MNI
• TRUMP TURNS ON ZELENSKIY, LEAVING UKRAINE FEW OPTIONS AMID WAR - BBG
• TRUMP SAYS NEW CHINA TRADE DEAL 'POSSIBLE' DESPITE TENSIONS - BBG
• AUSSIE JAN UNEMPLOYMENT AT 4.1%, 44k JOB CREATED - MNI BRIEF
• ADVISORS SHARE CHINA CPI OUTLOOK FOR 2025 - MNI 

Fig 1: Australian Jobs Growth Up In January 

Source: MNI - Market News/Bloomberg/Refinitiv. 

UK

UKRAINE (BBC): “Prime Minister Sir Keir Starmer has backed Volodymyr Zelensky as a "democratically elected leader" after Donald Trump described the Ukrainian president as a "dictator". Sir Keir called Zelensky on Wednesday evening and told him it was "perfectly reasonable" for Ukraine to "suspend elections during wartime as the UK did during World War Two", Downing Street said.”

EU 

NORWAY (MNI INTERVIEW): Economic projections that serve as a basis for ongoing pay negotiations in Norway are likely to be little changed in the key March assessment, barring significant krone moves and changes in crude oil and other major prices, Norwegian wage settlement committee (TBU) chair Geir Axelsen told MNI.

EU/US (BBG): “The European Union is ready to discuss cutting tariffs on autos and other goods as it seeks to head off a trade war with the US, the bloc’s top trade official said Wednesday in Washington.” 

US/UKRAINE (BBG):"Donald Trump’s turn against Volodymyr Zelenskiy leaves Ukraine no good alternatives as it heads into the fourth year of Russia’s full-scale invasion." 

FRANCE/US (POLITICO): “French President Emmanuel Macron is coming to Washington next week, national security adviser Mike Waltz said on Wednesday. Macron called for an emergency “informal” meeting with world leaders just days ago in Paris to discuss European security and the challenges posed by President Donald Trump’s administration.”

TRADE (POLITICO): “The European Union is prepared to talk with the United States about reducing its 10 percent tariff on cars as part of a broader negotiation aimed at avoiding a transatlantic trade war, a top European Union official said Wednesday.”

UKRAINE (DW): “Ukrainian President Volodymyr Zelenskyy is set to meet US official Keith Kellogg in Kyiv amid a push to end the war. It comes as Trump has repeatedly insulted Zelenskyy, sparking a European backlash.”

UKRAINE (POLITICO): “After American President Donald Trump attacked Kyiv’s leader Volodymyr Zelenskyy, calling him incompetent and a “dictator without elections” who had duped the U.S. into coughing up billions of dollars in military support, Ukrainian politicians, officials and soldiers leaped to their president’s defense.”

BUSINESS (ECONOMIST): “The European aerospace giant’s full-year results, published on Thursday, will make for happy reading for investors. Airbus delivered 766 planes and took orders for 878 more in 2024, adding to a backlog that now stands at 8,658 jets.”

US 

FED (MNI): Federal Reserve officials indicated they are content to keep interest rates on hold for the foreseeable future, particularly given upside risks to the inflation outlook and policy uncertainty from Washington, according to minutes from the late January meeting released Wednesday

FED (MNI): The Federal Reserve can allow monetary policy to stay restrictive for now in the face of sturdy growth, employment and elevated inflation, Fed Vice Chair Philip Jefferson said Wednesday, noting that higher household wealth is fueling robust consumer spending. 

FISCAL (BBG): “President Donald Trump suggested that some savings from his federal cost-cutting effort, overseen by billionaire Elon Musk, could be sent back to US taxpayers, with another portion being used to reduce the national deficit.” 

US/CHINA (BBG): "US President Donald Trump said it would be possible to reach a fresh trade deal with China, signaling he is open to heading off a brewing trade fight between Washington and Beijing." 

TARIFFS (RTRS): "U.S. President Donald Trump said on Wednesday he will announce tariffs related to lumber, cars, semiconductors and pharmaceuticals "over the next month or sooner."" 

OTHER 

AUSTRALIA (MNI BRIEF): The unemployment rate lifted 10 basis points to 4.1% as expected over January, while the economy created 44,000 jobs, more than double the anticipated amount, data from the Australian Bureau of Statistics revealed Thursday. 

AUSTRALIA (BBG): “Australia’s central bank assessed that keeping interest rates unchanged this year would have resulted in core inflation going below the 2.5% midpoint of its target, Deputy Governor Andrew Hauser said.” 

JAPAN (BBG): "Bank of Japan Governor Kazuo Ueda said he held a regular meeting with Prime Minister Shigeru Ishiba to exchange views on the economy and financial markets ahead of a Group of 20 meeting next week" 

CANADA (MNI): Canada’s response to any U.S. tariffs will be restrained by the high cost of escalation, with officials focusing instead on boosting domestic growth by reviving stalled projects like energy pipelines, industry leaders told MNI. Any export tariff "just punishes our industry, makes us less competitive," Mining Association of Canada president Pierre Gratton said in an interview.

CHINA 

POLICY RATES (YICAI): “The People’s Bank of China will need to hold off cutting interest rates or the reserve requirement ratio due to cooling expectations for a U.S. Federal Reserve rate cut and yuan depreciation pressure amid the uncertainty of American tariff hikes, Yicai.com reported citing analysts.”  

LPRs (MNI BRIEF): China's Loan Prime Rate remained unchanged on Thursday according to a People's Bank of China statement, in line with expectations as the central bank held its easing pace to curb over-leverage in the bond market and reduce pressure on the yuan. 

CONSUMER SPENDING (SECURITIES TIMES): “China moves to improve the quality of goods and services and consumer rights protection to help boost spending, according to a three-year plan released by five departments.” 

CPI (MNI): Advisors share their outlook for China CPI over 2025.  On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

CHINA MARKETS 

MNI: PBOC Net Drains CNY0.8 Bln via OMO Thursday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY125 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY0.8 billion after offsetting the maturity of CNY125.8 billion today, according to Wind Information.
 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6723% at 09:40 am local time from the close of 2.0587% on Wednesday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 55 on Wednesday, compared with the close of 45 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Higher At 7.1712 Thurs; -1.19% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1712 on Thursday, compared with 7.1705 set on Wednesday. The fixing was estimated at 7.2874 by Bloomberg survey today.

MARKET DATA

AUSTRALIA JAN. EMPLOYMENT +44.0K M/M; EST. 20.0K; DEC. +60.0K
AUSTRALIA JAN. JOBLESS RATE 4.1%; EST. 4.1%; DEC. 4.0%
AUSTRALIA JAN. FULL-TIME EMPLOYMENT +54.1K M/M; DEC. -23.7K
AUSTRALIA JAN. PART-TIME EMPLOYMENT -10.1K; DEC. +83.7K
AUSTRALIA JAN. PARTICIPATION RATE 67.3%; EST. 67.1%; DEC. 67.2%

SOUTH KOREA FEB. CONSUMER CONFIDENCE 95.2; JAN. 91.2

SOUTH KOREA JAN. PRODUCER PRICES +1.7% Y/Y; DEC. +1.7% Y/Y

MARKETS

US TSYS: Tsys Futures Edge Higher, Trump Speaks, 10yr At 4.517%

• Tsys futures are slightly higher today, with the short-end outperforming. Earlier there was a block seller of TY, however flows have been light, while ranges remain narrow. TU is +00 3/4 at 102-24 3/8, while TY is +03+ at 109-02.
• TY recovered off the intraday low of 108-21+ well, keeping the price clear of the Feb 12 low. Any further reversal higher would expose key resistance and bull trigger at 110-00, the Feb 7 high. For bears, recent weakness resulted in a break of 108-20+, the Feb 4 low, signalling the end of the correction between Jan 13 - Feb 7. Moving average studies highlight a dominant downtrend. A resumption of weakness would open 108-00, Jan 16 low, and expose 107-06, Jan 13 low and bear trigger.
• Cash tsys yields are trading 1-2bps richer, curves are slightly flatter while the 5yr is outperforming -1.8bps at 4.347%, while the 10yr is -1.6bps at 4.517%. The 2s5s10s fly is -1bps at -8.627
• At the FII Priority Summit in Miami Beach, Trump outlined plans to reduce inflation and interest rates by cutting government "waste," which he claimed would boost the stock market and grow the economy by shrinking the federal government. He also pledged to work with Congress to extend the "Trump tax cuts," introducing 100% expensing for new US factories and substantial tax reductions for oil and gas producers.
• Trump also indicated that a new trade deal with China is "possible," referencing a previously successful agreement and emphasizing his "very good relationship" with Chinese leader Xi Jinping during a conversation with reporters on Air Force One.
• Goolsbee says once inflation comes down, rates can come down with it.
• Thursday's schedule includes the Philly Fed manufacturing survey alongside weekly jobless claims, while the highlight of the Fedspeak schedule is St Louis's Musalem.

JGBS: Futures Drop On Report That Ueda and Ishiba “Didn’t Discuss Rising Yields”

JGB futures are little changed compared to settlement levels and in the middle of today’s range after Bloomberg reported that BoJ Governor Kazuo Ueda said he "Didn’t discuss rising yields with Ishiba" when he met with Prime Minister as part of regular meetings to exchange views on financial and economic developments.

• Outside of the previously outlined Weekly International Investment Flow, there hasn't been much by way of domestic drivers to flag.
• Cash US tsys are flat to 4bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday's modest rally.
• Cash JGBs are flat to 2bps richer across benchmarks, with the 40-year leading. The benchmark 10-year yield is 0.4bp higher at 1.438% after setting a fresh cycle high of 1.448% today.
• The swaps curve has bull-flattened, with rates flat to 4bps lower. Swap spreads are tighter.
• The local calendar will also see an Auction for Enhanced-Liquidity 5-15.5-year later.
• Tomorrow, the local calendar will see National CPI and Jibun Bank PMIs data.

AUSSIE BONDS: Strong Jobs Data Weighs On Market, AU-US 10Y Diff Back Above Flat

ACGBs (YM -3.0 & XM -1.5) are 3-5bps weaker, with the futures flatter curve, after today’s Employment Report.

• January employment was higher than expected rising 44k driven by a 54.1k rise in full-time jobs. The unemployment rate still ticked up 0.1pp to 4.1%, as expected, but was driven by a new record participation rate up 0.1pp to 67.3%.
• Cash US tsys are flat to 4bps richer, with a steepening bias, in today’s Asia-Pac session.
• Cash ACGBs are 1-2bps cheaper on the day, with the AU-US 10-year yield differential at +2bps.
• Swap rates are 2bps higher on the day, 3-4bps higher than pre-data levels.
• The bills strip is flat to -2 across contracts.
• RBA-dated OIS pricing is 1-5bps firmer across meetings after the data. A 25bp rate cut in April is given an 11% probability, with a cumulative 42bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar will see S&P Global PMIs and the RBA”s Parliamentary Testimony alongside the AOFM's planned sale of A$700mn of 2.5% May-30 bond.
• TCV has launched a new TCV 5.5% Sep-39 fixed-rate benchmark with initial price guidance of EFP + 106-109bp. Pricing is expected to take place tomorrow. Barrenjoey Markets, CBA and UBS are joint lead managers. 

BONDS: NZGBS: Mixed Close But Off Cheaps, Strong Demand Meets Supply

NZGBs closed mixed, with the 2-year benchmark 4bps cheaper but the 10-year 1bp richer. 

• The local market suffered some negative spillover from ACGBs after the January Employment Report surprised significantly on the upside.
• Nevertheless, all benchmarks finished well off the session’s worst levels, after today’s supply showed strong demand. Cover ratios across the lines ranged from 4.64x (May-41) to 5.14x (Apr-27).
• The move away from session cheaps was aided by cash US tsys, which are flat to 4bps richer across benchmarks in today’s Asia-Pac session.
• Swap rates closed flat to 2bp higher, with the 2s10s curve flatter.
• RBNZ Governor Orr spoke to parliament’s Finance and Expenditure Select Committee earlier today. He expressed optimism about inflation being within the 1-3% target range and justified a 50bps cut in the OCR to 3.75%. He indicated that further rate reductions are expected.
• RBNZ-dated OIS pricing closed little changed across meetings today, flat to 4bps firmer than yesterday’s pre-RBNZ policy decision levels.
• Currently, 27bps of easing is priced for April, with a total of 62bps expected by November 2025.
• Tomorrow, the local calendar will see Trade Balance data. 

FOREX: USD/JPY Eyeing 150.00 Test, AUD & NZD Aided By CNH Gains

The USD BBDXY index sits around 0.20% lower, last around 1289.5. Yen has been the main outperformer today, up 0.80%, but as the session has progressed other G10 currencies have ticked higher against the USD, particularly AUD and NZD.

• USD/JPY weakness accelerated as the pair broken down through Feb 7 lows of 150.93. Futures activity spiked to highs for the week. Yen has been aided by a pullback in US yields, while equity sentiment in the Asia Pac region has mostly been negative.
• This weighed on AUD and NZD, but this afternoon both currencies have regained ground. Lower USD/CNH levels after US President Trump said a trade deal with China was possible has likely helped. AUD/USD was last near 0.6365, up 0.30%, NZD close to 0.5720. Earlier Australian labor market data was also stronger than expected, with a surge in full time jobs.
• BoJ Governor Ueda also stated he didn't discuss rising JGB yields with PM Ishiba at their regular meeting to discuss economic matters. This may suggests comfort around the broader tightening BoJ backdrop. USD/JPY move to fresh lows sub 150.30 this afternoon. A break sub 150.00 could see 149.69, the Dec 9 low from last year targeted.
• JPY and AUD have accounted for the largest FX options volumes so far today.
• Looking ahead, Fed’s Goolsbee, Musalem, Barr and Kugler speak and US jobless claims, January leading index and February Philly Fed business outlook and euro area preliminary February consumer confidence print. 

ASIA STOCKS: China & HK Equities Drop As Tech Rally Runs Out Of Steam

China and Hong Kong equities are struggling today driven by a faltering tech rally and broader economic concerns. The HSI is 1.55% lower, while the Hang Seng Tech Index fell 2.5%, with tech giants like Meituan (-6.4%), Alibaba (-3.3%), Tencent (-2.6%), Kuaishou (-8.4%), and Bilibili (-5.1%) leading the losses amid profit-taking and skepticism about the sustainability of the tech surge without stronger economic fundamentals, while Alibaba is also expected to release earnings later today.

• The Hang Seng China Enterprises Index also declined by as much as 2.4%, its steepest drop in over two weeks, pressured by Meituan’s costly social security expansion plans for delivery workers and anticipation of earnings from Alibaba, Bilibili, and NetEase later today, however we have clawed some of those losses back to last trade down 1.50%.
• In mainland equities, the CSI 300 Index and Shanghai Composite Index edged down 0.4% and 0.2%, respectively, reflecting cautious sentiment.
• The tech-driven rally, which has added roughly US$280b to Hong Kong’s market value this year, fueled by DeepSeek’s AI breakthrough, is starting to showing signs of fatigue, with analysts like Goldman Sachs emphasizing the need for robust policy stimulus to address China’s macroeconomic challenges.
• The China Securities Journal reports that investments in Chinese tech stocks are "increasingly crowded," with the tech sector comprising 46% of total market trading, nearing a historical high of 50% from April 2023. Fund managers are cautioning about valuation risks due to a "slightly overheated" trading sentiment, particularly in sub-segments like cloud computing, machine vision, and industrial software, while areas like optical fiber cable and AI chips remain less saturated, pre BBG.
• Adding to the bearish mood, FOMC minutes were released overnight and indicated a reluctance to cut rates soon, citing inflation risks from potential US trade and immigration policies under Trump, further dampening investor confidence in the region’s markets.

ASIA STOCKS: Asian Equities Broadly Lower As Tech Rally Runs Out Of Steam

Asian equity markets are lower today as concerns over U.S. geopolitical shifts and tariff uncertainties dampened risk sentiment. The MSCI Asia Pacific Index fell by as much as 1.1%, with notable declines in Japan’s Topix (-1.25%) and Nikkei (-1.4%), Australia’s ASX 200 (-1.25%), and HSI (-1.25%), where Chinese tech stocks slumped over 2%—dragged by Meituan (-5.8%) and Alibaba (-4.6%) ahead of its earnings—pausing a DeepSeek-fueled rally. The yen strengthened to its highest level against the dollar since December, amid speculation of a BOJ rate hike, while Tsys yields edged lower and gold held near record highs, reflecting a cautious market mood driven by U.S.-Ukraine tensions, Fed signals of steady rates, and Trump’s mixed trade rhetoric involving potential China deals and a 25% lumber tariff.

• The ASX 200 drop was driven by a rising unemployment rate and declines in banking and mining stocks. New Zealand’s NZX 50 fell 1.2%.
• Japan’s benchmarks are lower as a stronger yen pressured exporters like Toyota (-1.5%), with additional selling in auto and pharmaceutical sectors amid U.S. tariff threats on cars, chips, and drugs.
• South Korea’s KOSPI is 0.8% lower, with auto stocks like Hyundai Motor (-0.49%) and shipbuilders like HD Korea Shipbuilding (-5.02%) leading losses after Trump’s tariff comments. Taiwan's TAIEX is 0.40% lower.

OIL: Supply & Demand Uncertainty Is Reducing Market Volatility

Oil prices are moderately lower today following industry-based data showing another crude stock build in the US. It had been rising this week on reports that OPEC was considering another delay to its output normalisation. WTI is down 0.4% to $71.82/bbl, close to the intraday low, and Brent is 0.3% lower at $75.80/bbl. The USD index is down 0.2%.

• The numerous US policy changes and statements are increasing uncertainty and resulting in oil prices range trading as the market waits for developments to give it clearer direction. The uncertainty over the path for tariffs, sanctions and US oil production has clouded the global demand and supply outlook. As a result, market volatility is its lowest since July, according to Bloomberg.
• Today US President Trump said that a trade deal with China is still possible after 10% tariffs were imposed on all imports from China this month and China retaliated with taxes on US oil and gas.
• Bloomberg reported that US inventories rose a further 3.34 mn barrels last week, according to people familiar with the API data, higher than expected. There was a gasoline build of 2.8mn but a distillate drawdown of 2.7mn. Stocks have been rising due to increased flows from Canada to beat tariff deadlines and planned US refinery maintenance. The official EIA data is out later today.
• Later the Fed’s Goolsbee, Musalem, Barr and Kugler speak and US jobless claims, January leading index and February Philly Fed business outlook and euro area preliminary February consumer confidence print. 

GOLD: Rally Resumes as Gold Approaches New Highs.   

• Gold had a day of consolidation in the US trading day, finishing off new highs.
• Gold continues to benefit from the uncertainty around the levelling of tariffs, tending to rally on days when new tariffs are being threatened by the Trump administration.
• Opening at US$2,933.58 gold rallied steadily all day to reach $2,944.65 into the Asian afternoon trading session.
• AngloGold announced a $1bn profit for 2024, with FCF up to $942m with output up to 2.7m ounces, prior to the onboarding of the newly acquired Centamin PLC.
• Gold Fields reported a 77% y/y increase in net income to $1.25bn.
• Speculation that the US could re-value its gold holdings continues with the President stating “we will make sure everything is there and everything is fine.”
• In further signs that environmental controls will be wound back, President Trump is fast tracking commodity projects with a gold mine Idaho amongst them.
• Barrick Gold has signed an agreement with the Mali government to end the despite over mining assets, causing their shares to rise for a second straight day.   

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
20/02/2025	0700/0800	**	DE	PPI
20/02/2025	1000/1100	**	EU	Construction Production
20/02/2025	1100/1100	**	GB	CBI Industrial Trends
20/02/2025	1330/0830	*	CA	Industrial Product and Raw Material Price Index
20/02/2025	1330/0830	***	US	Jobless Claims
20/02/2025	1330/0830	**	US	Philadelphia Fed Manufacturing Index
20/02/2025	1435/0935		US	Chicago Fed's Austan Goolsbee
20/02/2025	1500/1600	**	EU	Consumer Confidence Indicator (p)
20/02/2025	1530/1030	**	US	Natural Gas Stocks
20/02/2025	1600/1100	**	US	DOE Weekly Crude Oil Stocks
20/02/2025	1630/1130	**	US	US Bill 04 Week Treasury Auction Result
20/02/2025	1630/1130	*	US	US Bill 08 Week Treasury Auction Result
20/02/2025	1705/1205		US	St. Louis Fed's Alberto Musalem
20/02/2025	1800/1300	**	US	US Treasury Auction Result for TIPS 30 Year Bond
20/02/2025	1930/1430		US	Fed Governor Michael Barr
21/02/2025	2200/0900	***	AU	Judo Bank Flash Australia PMI
20/02/2025	2200/1700		US	Fed Governor Adriana Kugler
21/02/2025	2330/0830	***	JP	CPI
21/02/2025	0001/0001	**	GB	Gfk Monthly Consumer Confidence
21/02/2025	0030/0930	**	JP	Jibun Bank Flash Japan PMI
21/02/2025	0700/0700	***	GB	Public Sector Finances
21/02/2025	0700/0700	***	GB	Retail Sales
21/02/2025	0745/0845	**	FR	Manufacturing Sentiment
21/02/2025	0815/0915	**	FR	S&P Global Services PMI (p)
21/02/2025	0815/0915	**	FR	S&P Global Manufacturing PMI (p)
21/02/2025	0830/0930	**	DE	S&P Global Services PMI (p)
21/02/2025	0830/0930	**	DE	S&P Global Manufacturing PMI (p)
21/02/2025	0900/1000	***	IT	HICP (f)
21/02/2025	0900/1000	**	EU	S&P Global Services PMI (p)
21/02/2025	0900/1000	**	EU	S&P Global Manufacturing PMI (p)
21/02/2025	0900/1000	**	EU	S&P Global Composite PMI (p)
21/02/2025	0930/0930	***	GB	S&P Global Manufacturing PMI flash
21/02/2025	0930/0930	***	GB	S&P Global Services PMI flash
21/02/2025	0930/0930	***	GB	S&P Global Composite PMI flash
21/02/2025	1330/0830	**	CA	Retail Trade
21/02/2025	1330/0830	**	US	WASDE Weekly Import/Export
21/02/2025	1330/0830	**	CA	Retail Trade