ForexLive Asia-Pacific FX news wrap: USD/JPY wild ride on new BOJ Governor trial balloon

• Powerful Turkey earthquake – Turkish Government requests International Aid
• BOJ’s Kuroda: CPI sustainable at 2%, accompanied by wage growth, has not yet been achieved
• BOJ Kuroda says will seek to hit 2% inflation in a stable & sustainable manner
• Goldman Sachs raise their target for the S&P500 to 4000 in 3 months (from 3600 prior)
• Japan senior official says no truth that Amamiya sounded out for BOJ Gov position
• Massive damage in Turkey from powerful earthquake – shockwaves felt internationally
• Chinese mainland and Hong Kong stock markets are opening much lower – balloon tensions
• Magnitude 7.7 earthquake hits Turkey
• PBOC sets USD/ CNY reference rate for today at 6.7737 (vs. estimate at 6.7755)
• WOW! The dollar moves higher, stocks move lower, yields higher after the WOW jobs report
• RBA “Shadow Board” recommends a +25bp interest rate rise on February 7
• Australian data – Q4 2022 Retail sales -0.2% q/q (expected -0.6%)
• Australia data – monthly headline inflation (from MI) +0.9% m/m, core also +0.9% m/m
• Newsquawk week ahead: Blinken in China; U of Michigan; RBA, BOC minutes
• More on the chatter that Amamiya may be the next BOJ Governor – he refused to comment
• IEA expects surging oil demand from China this year, OPEC+ may need to boost output
• Japan finance minister Suzuki says he hasn’t heard anything on BOJ Gov nominations yet
• Goldman Sachs says oil demand to outstrip supply later in 2023, a serious problem in 2024
• USD/JPY above 132 in early Monday Asia trade, 06 February 2023 – chart
• Japan’s Nikkei report on Amamiya being sounded out as next BOJ Governor – will be tasked with normalizing policy
• ECB Visco says further tightening can continue with caution, regard to steps already taken
• Indian refiners have begun paying for Russian oil via Dubai traders in UAE dirhams
• Forexlive Americas FX news wrap: US jobs report was a “WOW” number

Japan’s
Nikkei reported prior to market open that a current Bank of Japan
Deputy Governor, Masayoshi Amamiya, had been sounded out by the
government to take on the role as next Governor once Kuroda departs
on April 8. The Nikkei cited multiple, unnamed, sources for the
information.

USD/JPY
gapped higher in very, very early Asian Monday trade. As is always
the case in the early hours of Asia market liquidity is very poor.
New Zealand is normally the first FX centre to open, but markets
there were closed for a holiday. Which left Australia’s east coast
as the next centre to open. In such illiquid markets fresh news
hitting can see spreads blow-out and moves extend. Such was the case
this morning with USD/JPY jumping rapidly towards 132.50 before
running out of buys outnumbering sells. After some choppy trading
near (what turned out to be) these highs USD/JPY began to head back
down to cover its gap. The down move was egged on by Japan’s
finance minister Suzuki saying he hadn’t heard anything on
nominations for Bank of Japan Governor yet. This seems hard to
believe but Suzuki added he had been out of the loop on the issue.
I’m not sure a finance minister should be out of such a loop but
that’s what he said. Further, Amamiya refused to comment on the
news when he was asked. USD/JPY continued to subside.

The
gap was not entirely covered, bids held circa 131.50 and USD/JPY has
since traded back onto the 132 big figure. Japan’s deputy chief
cabinet secretary Isozaki then weighed in, saying there was no truth
to reports BOJ deputy gov Amamiya had been sounded out as next BOJ
governor. USD/JPY is currently back under 132.00 as I update.

AUD/USD
and NZD/USD were in the crossfire, these gapped a little lower and
have both subsequently filled in these gaps. It’s a similar story
for GBP/USD and EUR/USD.

Oil
has stabilised during the session, with some supportive weekend news
and comments (see bullets above).

In
non-market news there has been a massive, magnitude 7.8, earthquake
in southern central Turkey, near the border with Syria. Extensive
damage and fatalities have been reported in both countries and this
news is likely to worsen. Calls for international aid have been made.

Asian
equity markets:

• Japan’s
  Nikkei 225 +0.9% (liking the Amamiya continuity chatter)

• China’s
  Shanghai Composite -1% (lead from Friday Wall Street but also hit on the balloon shoot-down news)

• Hong
  Kong’s Hang Seng -2.3% (ditto)

• South
  Korea’s KOSPI -0.9%

• Australia’s
  S&P/ASX 200 -0.2%