Indonesia's trade surplus narrowed to USD 2.24 billion in December 2024 from USD 3.29 billion in the same month a year earlier, below market estimates of USD 3.79 billion. This marks the smallest trade surplus since February, mainly due to a jump in imports. Purchases surged 11.07%, higher than forecasts of a 4.84% gain and accelerating sharply from a 0.01% rise in November. Meanwhile, shipments grew by 4.78% yoy, marking the ninth consecutive month of growth and below expectations of 7.38%, easing sharply from a 9.14% growth in the previous month.

Imports to Indonesia grew by 11.07% yoy to USD 21.22 billion in December 2024, easily beating market consensus of 4.84% and strongly picking up from a muted performance in the previous month. The latest result was achieved amid strong domestic demand at year-end, resulting in a full-year increase of 5.31%.

Exports from Indonesia increased 4.78% from a year earlier in December 2024, far below market forecasts of a 7.38% rise. It marked the ninth straight month of growth in exports but the softest pace since June.

BoJ's Ueda: Will raise rates if improvement in economy and price conditions continues.Speaking at the Bank of Japan (BoJ) branch manager meeting on Wednesday, Governor Kazuo Ueda said on that they “will raise rates and adjust degree of monetary support if improvement in economy and price conditions continues.”

ForexLive Asia-Pacific FX news wrap: Awaiting the US CPI data, USD/JPY fell on Ueda.Major FX traded in subdued ranges (yen strengthened, more on this below) during the session here as traders awaited the US December CPI data due at 8.30 am US Eastern time today.

China’s 10-year government bond yield fell to around 1.64% as the People’s Bank of China intensified short-term liquidity injections in response to a cash squeeze. On Wednesday, the central bank injected a net CNY 958.4 billion through seven-day reverse repurchase agreements, the second highest on record. This action aimed to counterbalance the expiration of medium-term lending facilities, meet heightened cash demands during the peak tax season, address liquidity pressures ahead of the Lunar New Year, and ensure sufficient liquidity in the banking system. Meanwhile, the PBOC is set to sell CNY 60 billion worth of six-month bills in Hong Kong on January 15th, the largest sale of its kind since 2018. Investors are now looking forward to China’s upcoming economic data, including Q4 GDP, industrial production, retail sales, and the unemployment rate, all of which are set to be released later this week.

Australia’s 10-year government bond yield steadied around 4.68% after three consecutive sessions of gains. The recent rally in domestic yields mirrored a broader surge in global bond markets, due to concerns over persistent inflation and widening fiscal deficits. On the monetary policy front, markets are assigning a 70% chance of a 25bps cut by the Reserve Bank of Australia at its first meeting of the year in February, amid weak consumer spending and improving inflation environment. Investors are now turning their attention to the country’s jobs report, scheduled for release on Thursday, to assess the health of the labor market and its potential impact on the RBA’s future policy decisions. Meanwhile, in the U.S., traders are focused on the release of the highly anticipated consumer inflation report later today, which could provide further clarity on the Federal Reserve's interest rate path.

Bangladesh's annual inflation rate eased to 10.89% in December 2024 from a four-month high of 11.38% in the previous month. Prices moderated for food and non-alcoholic beverages (12.92% vs 13.8% in November), furnishings, household equipment, and routine household maintenance (6.96% vs 7.07%), health (5.17% vs 10.5%), and communication (9.72% vs 9.99%). Conversely, costs accelerated for housing and utilities (9.67% vs 9.6%), transport (6.08% vs 5.66%), alcoholic beverages and tobacco (17.13% vs 16.8%), clothing and footwear (9.69% vs 8.99%), recreation and culture (7.92% vs 7.75%), education (9.14% vs 8.09%), restaurants and hotels (12.13% vs 11.04%), and miscellaneous goods and services (14.85% vs 14.78%). On a monthly basis, consumer prices fell for the second consecutive month to 1.02% in December from 0.5% in the previous month.

The Japanese yen traded near 158 per dollar on Wednesday, hovering close to its weakest levels since July of last year, when Japanese authorities intervened to support the currency. The yen remains under pressure as investors await key US inflation data, which could limit the scope for Federal Reserve interest rate cuts this year. Domestically, Bank of Japan Deputy Governor Ryozo Himino indicated earlier this week that the central bank is likely to discuss a potential rate hike at next week’s policy meeting. However, he added that while price developments and inflation expectations are generally on track, both domestic and global risks remain a concern. On the economic front, a private survey showed a rebound in sentiment among Japanese manufacturers in January, driven primarily by improved conditions in the materials industries.

The People’s Bank of China (PBoC) today injected a net CNY 958.4 billion of cash through seven-day reverse repurchase agreements in its daily open market operations. This represented the second-largest cash injection ever recorded, according to Bloomberg News. The operation aimed to offset the impact of the expiration of medium-term lending facilities (MLF), increased cash demand ahead of the Lunar New Year holidays, and peak tax season pressures. Earlier in the week, a cash shortage drove seven-day interbank funding rates to their highest level in over a year. The reverse repurchase agreements partially replaced the expiration of approximately CNY 955 billion in medium-term financing. In recent months, the central bank has shifted its policy approach, reducing reliance on the MLF as its primary tool and increasingly using the seven-day reverse repo rate to guide market borrowing costs. The seven-day reverse repo rate has remained steady at 1.5% since a 20bps cut in late September.

EUR/JPY Price Forecast: Edges lower to near 162.50; initial support appears at 14-day EMA.EUR/JPY trades slightly lower, hovering around 162.60 during Wednesday's Asian trading session, following a 1% gain in the previous session. Technical analysis of the daily chart indicates that the currency cross remains within an ascending channel pattern, reflecting a continued bullish trend.

Indonesia Trade Balance registered at $2.24B, below expectations ($3.79B) in December.Indonesia Trade Balance registered at $2.24B, below expectations ($3.79B) in December

Indonesia Imports above forecasts (4.84%) in December: Actual (11.07%).Indonesia Imports above forecasts (4.84%) in December: Actual (11.07%)

The New Zealand dollar traded at $0.56 on Wednesday, following a 0.4% gain in the previous session, as investors geared up for a pivotal U.S. consumer inflation report due later today that could provide further insights into the Federal Reserve’s monetary policy outlook. On Tuesday, the cooler-than-expected U.S. December producer inflation data weighed on the U.S. dollar, providing support for the Kiwi dollar. In addition, reports suggested that President-elect Donald Trump may take a more strategic approach to imposing trade tariffs, potentially easing concerns about global trade tensions and bringing some relief to the New Zealand dollar. Domestically, markets continue to expect the Reserve Bank of New Zealand will cut its 4.25% cash rate by 50bps in February, amid the country's weak economic conditions.

The Australian dollar slipped below $0.62 on Wednesday as caution dominated the market ahead of crucial US inflation data, which could limit the potential for Federal Reserve interest rate cuts this year. The Aussie received some relief on Tuesday from a pullback in the US dollar, following softer-than-expected US producer inflation figures. Domestically, traders are focused on Thursday's Australian employment data for clues on the Reserve Bank of Australia's potential rate cut trajectory. Additionally, Australia's fourth-quarter inflation data, due at the end of the month, will be closely watched as one of the last major indicators before the RBA's monetary policy decision next month. Markets are currently pricing in a 70% probability that the RBA will reduce its 4.35% cash rate by 25 basis points in February, with a rate cut in April fully priced in.

Indonesia Exports came in at 4.78% below forecasts (7.38%) in December.Indonesia Exports came in at 4.78% below forecasts (7.38%) in December

The offshore yuan edged lower to around 7.34 per dollar, snapping a two-session winning streak, as the People's Bank of China ramped up short-term liquidity injections amid a cash squeeze. On Wednesday, the central bank injected a net CNY 958.4 billion through seven-day reverse repurchase agreements in daily open market operations. This move aimed to offset the expiration of medium-term lending facilities, meet peak tax season demands, address heightened cash needs ahead of the Lunar New Year, and maintain ample liquidity in the banking system. Meanwhile, the PBOC announced on Tuesday plans to enhance forex market management, curb disruptive behavior, and mitigate risks of yuan overshooting, while also raising the macro-prudential parameter to 1.75 to encourage overseas borrowing. Investors are now focused on China's upcoming economic data, including Q4 GDP, industrial production, retail sales, and the unemployment rate, which are set to be released later this week.

Chinese stocks fell on Wednesday as caution prevailed in the market ahead of key US inflation data. The Shanghai Composite declined 0.2% to around 3,234, while the Shenzhen Component dropped 0.6% to 10,100, reversing some of the previous session’s gains. Mainland stocks had rallied sharply on Tuesday after Chinese authorities intensified policy support to halt the market's decline. The China Securities Regulatory Commission pledged to prioritize market stability in 2025, and the People's Bank of China promised to prevent risks associated with exchange rate fluctuations. However, investors are still waiting for more concrete policy measures from Beijing, amid an ongoing economic slowdown and persistent deflationary pressures. Notable losses were seen in major companies, including East Money (-1.6%), Lens Technology (-9.7%), Zijin Mining (-2.7%), Hithink Royalflush (-3.9%), and Shenzhen Megmeet (-3.8%).

Hong Kong's stocks rose 72 points or 0.4% to 19,298 in early trade on Wednesday, marking the second session of increases. A modest gain in US futures bolstered sentiment after lower-than-expected producer inflation in December, ahead of a CPI report later today. The Hang Seng moved away from its lowest level in nearly four months after China’s top securities regulator and the PBoC pledged to stabilize market volatility. The central bank added it will also aid the listing and bond issuance of high-quality firms in Hong Kong, and raise forex reserves allocated to assets in the city. Adding to the positive mood was a surge in new yuan loans in December after slipping to their lowest since 2012 in November. However, further rises were capped by caution ahead of key data from China in the coming days, notably Q4 GDP figures and a slew of activity readings for December. Semicon Manufacturing jumped (6.6%), along with SenseTime Group (3.0%), Kingsoft Corp. (2.7%), and Tencent Hlds. (2.4%).

Gold prices fell to around $2,670 per ounce on Wednesday, reversing gains from the previous session as investors grew cautious ahead of US consumer inflation data later today. Any signs of resurging inflation could possibly spur further cautious adjustments to the Federal Reserve’s rate-cut expectations. On Tuesday, the metal found some support after a softer-than-expected US PPI report, sparking faint hopes that the Fed might have room for additional rate cuts this year. Meanwhile, with President-elect Donald Trump set to begin his second term next week, attention is also on his pro-inflationary economic policies, amplified by tariff threats, which could strengthen the case for a hawkish Fed. Higher borrowing costs increase the opportunity cost of holding non-interest-bearing bullion, pressuring gold demand. Additionally, rising energy service costs in Europe have further weakened the case for lower rates by the ECB.

ECB's Lane: It takes time for monetary easing to impact and take effect.European Central Bank (ECB) Chief Economist Phillip Lane is speaking at Goldman Sachs' Global Macro conference in Hong Kong on Wednesday.

South Korean won weakened around 1,460 per dollar, reversing gains from the previous session, as investors assessed ongoing political turmoil. On Wednesday, impeached President Yoon Suk Yeol was arrested by the Corruption Investigation Office for High-Ranking Officials, marking the first arrest of a sitting South Korean leader. This followed a failed attempt on January 3, when security agents blocked investigators from entering his residence. On the monetary policy front, markets await the Bank of Korea’s upcoming monetary policy decision later this week. The central bank is widely expected to deliver a quarter-point rate cut on Thursday, a month earlier than previously anticipated, to support the economy amid political uncertainty. In economic news, latest data showed that South Korea's seasonally adjusted unemployment rate rose to 3.7% in December, marking the highest level in three years.

The dollar index held steady around 109.2 on Wednesday, lingering near two-year highs as investors awaited the December consumer inflation report, which could influence the future direction of Federal Reserve monetary policy. An upside surprise in inflation could limit the scope for Fed rate cuts this year or potentially prompt the central bank to maintain its current stance for an extended period. Markets are currently anticipating only a single quarter-point rate cut, likely in the second half of the year. Meanwhile, the dollar experienced a pullback on Tuesday following a weaker-than-expected monthly PPI report, which rose just 0.2% in December, below economists' forecast of 0.4%. The core PPI also remained unchanged, defying expectations of a 0.3% increase. Elsewhere, evolving headlines on Trump’s tariff plans are expected to add further volatility to the dollar as the January 20th inauguration approaches.

UK CPI inflation expected to edge up slightly in December, core rate to ease.UK CPI inflation expected to edge up slightly in December, core rate to ease

Event Guide: U.S. CPI Report (December 2024).What will the upcoming U.S. CPI release imply for the Fed's short-term policy biases? Here's what to look out for in the December inflation report.

Brent crude oil futures rose above $80 per barrel on Wednesday, following a 1.4% decline in the previous session, as tighter supply concerns slightly outweighed forecasts of steady US oil demand. Fresh restrictions on major producers and vessels have pushed key buyers, such as India and China, to seek alternatives. India plans to bar sanctioned vessels, while China has been actively securing cargoes from the Middle East and other regions in preparation for disruptions. Meanwhile, the EIA projects US oil demand to remain steady at 20.5 million bpd in 2025-2026, with output rising to 13.55 million bpd, up from an earlier forecast of 13.52 million bpd for this year. On the supply side, API data revealed a 2.6 million barrel drop in US crude stocks last week, exceeding the expected 3.5 million barrel reduction. If confirmed by government data later in the day, it would mark the eighth draw in the past twelve weeks.

WTI crude oil futures rose to around $77.7 per barrel on Wednesday, following a 1.7% decline in the previous session, as tighter supply concerns slightly outweighed forecasts of steady US oil demand. Fresh restrictions on major producers and vessels have pushed key buyers, such as India and China, to seek alternatives. India plans to bar sanctioned vessels, while China has been actively securing cargoes from the Middle East and other regions in preparation for disruptions. Meanwhile, the EIA projects US oil demand to remain steady at 20.5 million bpd in 2025-2026, with output rising to 13.55 million bpd, up from an earlier forecast of 13.52 million bpd for this year. On the supply side, API data revealed a 2.6 million barrel drop in US crude stocks last week, exceeding the expected 3.5 million barrel reduction. If confirmed by government data later in the day, it would mark the eighth draw in the past twelve weeks.

Rupee to inch up on dollar pullback before US inflation data.The Indian rupee is likely to open marginally higher on Wednesday as the dollar retreats in the lead up to U.S. inflation data that will give cues on the direction of U.S. interest rates.

US December CPI data due Wednesday, ranges of estimates (& why they're crucial to know).Taking a look at the range of expectations compared to the median consensus (the 'expected' in the screenshot above) for the key data points:

The benchmark KOSPI rose 0.5% to around 2,509 points on early Wednesday, extending gains from the previous session, led by advances from chip, shipbuilding, and finance stocks. Investor sentiment also improved as US inflation concerns eased following a softer-than-expected producer inflation report. At home, political unrest persists as investigators seek to arrest impeached President Yun Sok Yeol for a second time. In economic news, South Korea's seasonally adjusted unemployment rate climbed to 3.7% in December, marking the highest level in three years. Among key performers, chip giant SK Hynix climbed 2.1%, shipbuilder Samsung Heavy Industries surged 8%, and Shinhan Financial added 1.2%. Investors are now focused on the Bank of Korea's upcoming monetary policy decision, with widespread expectations for a third consecutive interest rate cut.