Daily Market Briefing, Asia Pacific

• Improved tone. Reports of a Greenland deal ‘framework’ boosts sentiment. US equities rose. USD index a bit firmer. AUD outperforms. NZD edges higher.• Data flow. The volatile Australian jobs report due today. US PCE deflator out tonight. Tomorrow Q4 NZ CPI is released. BoJ also meets on Friday. Global Trends An improvement in risk sentiment overnight after US President Trump dialed down his aggression with regards to Greenland at the Davos World Economic Forum. After earlier stating the US wouldn’t use force to acquire Greenland, President Trump posted that following discussions with the Secretary General of NATO a “framework...

• Geopolitical vol. Weekend US tariff announcements initially rattled markets. But the USD lost ground as yesterday rolled on. AUD & NZD higher.• US pressure points. US reliant on foreigners to fund its obligations. Reduced capital inflows could weigh on the USD over the medium-term. Global Trends There has been a modest market reaction to the weekend geopolitical news relating to Greenland. Indeed, for some the net swings may be somewhat surprising. For those catching up, over the weekend President Trump announced that eight countries (UK, Denmark, Germany, France, Sweden, Norway, Finland and The Netherlands) would be subject to a...

• Positive tone. Sentiment improved overnight. US equities rebounded. Bond yields rose. Oil fell. AUD ticked up thanks to some relative outperformance.• Data flow. Limited releases today. Next week things pick up with China GDP (Mon), AU jobs (Thurs), PMIs (Fri), BoJ (Fri), & US PCE (Fri) due. Global Trends Geopolitical related headlines generated a few minor bursts of volatility across a couple of asset classes the last few days. However, as our chart below shows, cross-asset volatility remains below average with the headline noise not having a lasting impact. Indeed, this was the case once again with the latest...

• Headline noise. Markets continue to take geopolitical/macro developments in stride. US equities rose overnight. AUD ticked higher.• US Fed. Investigation into Fed Chair Powell raises concerns about central bank independence. US CPI out tonight. US retail sales due later this week.• AU data. Household spending firmer than expected. AU jobs data (22 Jan) & Q4 CPI (28 Jan) important for RBA. A February rate hike is ~30% priced in. Global Trends A few geopolitical and economic crosscurrents such as developments in Venezuela and some US data have generated modest bursts of intermittent volatility over the past few weeks. But...

• Mixed signals. US data crosscurrents resulted in modest net market moves overnight. US equities consolidated. Oil prices fell. AUD lost a bit of ground.• US data. Core retail sales stronger, but PMIs underwhelmed. Labour market slack increasing with US unemployment highest since Q3 2021.• Macro events. NZ Q3 GDP due tomorrow. US CPI and ECB/BoE/BoJ meetings later this week. BoE expected to cut while BoJ could hike rates again. Global Trends Push-pull forces stemming from the large batch of US economic data released overnight resulted in modest net market moves. On balance, although the tech-focused NASDAQ ticked higher (+0.2%)...