FOREX: USD Index Tracking Up For The Week, Yen Unwinding Thurs Outperformance

• Whilst the world agonizes about tariffs and their potential impact on their economy, the Vietnamese parliament raised is economic growth target to ‘at least’ 8% in 2025.
• As Vietnam targets double digit growth from 2026 onwards today’s announcement is a meaningful revision of the prior 2025 target of 6.5%-7.0%.
• Inflation is targeted at 4.5%-5.0%, an increase in the upper band by 0.5% with more monetary and fiscal policies to be announced.
• Vietnam has stated publicly that it has ‘no intention of imposing measures that restrict trade with the US’ and that they intend to import more US agricultural products.
• The parliament approved an $8bn railway connecting Haiphong to Lau Cai, running through Hanoi running some 400 kms.  The infrastructure will be financed from the state budget and the issuance of bonds.
• The government announced the construction of the Ninh Thuan nuclear power plant, to be completed by 2030 alongside a significant overhaul of the government with thousands of jobs to go.
• The Vietnamese government 10YR bond yield was at 3.13%, having increased 80bps over the last year. 

ACGBs (YM -1.0 & XM -1.5) sit modestly weaker after today’s release of Q4 Wages data.

• The Q4 wage price index (WPI) rose 0.7% q/q and 3.2% y/y down from the upwardly revised Q3 0.9% q/q & 3.6% y/y. Q4 was in line with yesterday’s updated RBA forecasts and its statement that “wage pressures have eased”.
• The quarterly increase in Q4 was 0.1pp below consensus and the lowest since Q1 2022. However, with productivity growth falling, the RBA pointed out that unit labour costs remain elevated.
• Cash US tsys are flat to 1bp richer in today’s Asia-Pac session.
• Cash ACGBs are flat to 2bps cheaper, with the AU-US 10-year yield differential at -3bps.
• Swap rates are flat to 1bp lower, with the 3s10s curve steeper.
• The bills strip is little changed.
• The local calendar will see January jobs data tomorrow, with the market expecting +20k and an unemployment rate of 4.1%, +0.1ppt.
• Yesterday, RBA Governor Bullock noted the labour market’s unexpected strength and cautioned that market expectations for further rate cuts are not guaranteed.
• RBA-dated OIS pricing is 1-7bps firmer than yesterday’s pre-RBA levels, with mid-2025 leading the rise.  A 25bp rate cut in April is given an 18% probability, with a cumulative 44bps of easing priced by year-end. 

• Tsys futures are slightly lower today, ranges are narrow while volumes are low. TU is -00¼ at 102-21⅞, while TY is -00+ 108-26+
• There has been very little in the way of US headlines throughout the session. The RBNZ cut rates for 50bps, while BOJs Takata spoke earlier where he reiterated that the central bank is in a position to adjust policy rates further if the outlook is met. Takata stated that risks of big market moves have been lowered, giving the central bank more flexibility.
• Cash tsys yields are flat to 1bps lower. The 2yr is -0.8bps at 4.297%, while the 10yr is -0.4bps at 4.564%.
• MNI's preview of the Minutes includes what to watch for upon release; MNI's FOMC Hawk-Dove Spectrum, and key highlights of FOMC participant commentary since the January meeting. PDF here
• Later today we have Housing stars, Building Permits, & FOMC meeting minutes