CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money before trading CFDs.

Asian Markets and FX start the week flat awaiting news from Federal Reserve and World Economic Forum

January 25, 2021

Time Zones mean that most mornings Asia looks West to see which direction markets should initially travel, and on Mondays, that means looking to Friday’s US and European closing prices. Today, they don’t paint a happy picture, with headline stock indices such as the S&P 500 finishing lower, and the NASDAQ essentially flat. Not surprisingly, Asian equity futures are also looking mainly red this morning, though that may not last much past the opening if some nuggets of optimism can be gleaned from somewhere.

There is not much going on in FX space either. Friday saw the EUR moving a little higher (dollar weakened) but spent most of the session flat, and Asian FX has done very little since Friday morning. US Treasury yields were down about 2bp to 1.08%, which may explain the latest slight softness in the USD and begs the question of why Asian FX didn’t do more.

We may also get some pointers from the virtual World Economic Forum (WEF) this week, where big-hitters Merkel and Macron are slated to speak. My guess is that the tone of their remarks will underline just how differently some parts of the world are faring – in other words, the so-called “synchronous global recovery” is far from synchronous at present, though it may become more so as the year progresses.

One factor that is keeping the recovery from being more uniform, is the very patchy vaccine rollout record, which itself reflects how different countries have fared in trying to secure doses of the various vaccines, and then, in actually getting hold of the vaccines themselves so rollout can take place. Here, Asia is not faring well, with limited numbers of vaccines secured, and fewer actually delivered. Most of Asia is lagging the field here, with China and India the main exceptions with their own vaccines.

Meanwhile in Asia….

There isn’t a whole lot going on in Asia macro space currently, though in geopolitical space, I note that Biden’s government has already been flexing its muscles to China over issues relating to Taiwan airspace incursions – China may be trying to get a feel for how tolerant this new US administration is going to be over issues relating to the rest of Asia. The early answer seems to be – it isn’t.

Taiwan production data today is likely to reflect the ongoing strong global demand for semiconductors, the consensus expectation is for a 6%Year on Year increase. We are a little below that and this is choppy data, but the trend is clearly upwards.

Tomorrow, South Korea releases 4Q GDP, which I think could look quite strong, though I have less of a sense of how 4Q CPI from Australia will go on Wednesday. The consensus is 0.7% QoQ. That is quite a bit stronger than we saw in New Zealand in 4Q (0.5%), and we are pitching our forecast a little lower than that.

Open an Account. Get started in less than 5 minutes