FOREX: USD/JPY Back Above 150.00, As Ueda Warns On Yields, Steady Elsewhere

ACGBs (YM -6.0 & XM -6.0) are weaker and near Sydney session lows.

• Outside of the previously outlined Leading Index, there hasn't been much by way of domestic drivers to flag.
• Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s bull-flattener. Wednesday's US data calendar remains light, with MBA mortgage data and the December Leading Index - more focus will be on the $13B 20Y Bond reopening auction, as well as a Fox interview with Pres Trump airing after Wednesday's cash close.
• Cash ACGBs are 5-6bps cheaper with the AU-US 10-year yield differential at -13bps.
• Swap rates are 4-5bps higher, with EFPs slightly tighter.
• The bills strip has bear-steepened, with pricing -2 to -5.
• A Bloomberg News survey of 48 economists forecast the cash rate to be unchanged at 4.35% at the end of Q1 25 and 4.10% by the end of Q2 25.
• RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (109%), with the probability of a February cut at 69% (based on an effective cash rate of 4.34%).
• Tomorrow, the local calendar is empty.

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• Gold rallied throughout the the day  to reach new highs for the year.
• Bullion opened at US2,708.21, rising throughout the trading day to $2,750.99.
• Gold typically likes either lower rates or a weaker USD and with Trump seemingly pulling back from tariffs on China for now, the USD was weaker against most Asian currencies.
• Gold also exhibits safe-haven status in times of volatility which no doubt will be in the days and weeks ahead as policies are announced.
• Trump has indicated that tariffs levelled at Mexico and Canada could come into place as early as February, and that he is considering a ‘universal tariff on all imports into the US’.   
• The threat of tariffs, proposed increase in spending and trade wars sees investors having concern as to the pathway for inflation and hence interest rates.
• Whilst the geo-politics will have input into the short run impact for gold, the longer term direction for rates will be the most significant for gold.
• Some of the largest gold ETFs were up over 3% yesterday in what was one of the biggest moves year to date. 

• +2,238 FVH5 at 106-05+, post time 15:07:25, DV01 $93k. Contract last trades -01¾ at 106-05+ just off session lows of 106-04+