Asian markets are trading with a mildly positive tone, with traders looking at a moderate risk on flows with equity in Japan, Australia and South Korea, trading in the green. There were few fresh drivers on Wall Street trade, aside from strong Chinese services PMI yesterday and a bounce from sell-off in risk assets, especially equities after the hawkish FOMC minutes and technical plays due to low liquidity and seasonality factors.
The major risk event for the session will be the US Nonfarm payroll report; participants look for a 400k rise in December payrolls while wages are seen rising 0.4% M/M. The job report could be framed in the context of Fed lift-off. The latest FOMC minutes relied hawkish with some Fed voters suggesting a rate hike could come before maximum employment is met. Still, several members said that this had already been achieved. The data will be gauged to see whether March will see the first lift-off from the Fed, so worth paying close attention to short-end rates, the USD against high beta FX pairs such as EMFX and equities – especially the long-duration sensitive sectors such as tech. On the radar, Fed’s Daly and Bostic are set to speak.
