investingLive Asia-Pacific FX news wrap: RBA push back, cutting cycle in the past

At a glance:

• FX ranges subdued despite heavy macro and geopolitical news flow

• Japan wages and JGB auction highlight long-end pressure

• RBA pushes back firmly on rate-cut expectations

• South Korea and China policy signals aim to stabilise markets

• Geopolitics add to risk premium, but not yet disorderly

Market overview:

Major FX pairs traded in narrow, subdued ranges despite a busy session for macro data and policy headlines across the Asia-Pacific region. Markets appeared content to absorb developments without chasing momentum, with positioning cautious ahead of upcoming global data and central-bank events.

Japan: wages and bonds in focus:

Japan’s real wages fell 2.8% y/y in November, the sharpest decline since January, as a plunge in bonus payments combined with still-elevated inflation continued to erode household purchasing power. The data underscore the ongoing challenge for the BOJ: tightening policy into an environment where real incomes remain under pressure.

Bond markets echoed that tension. Japan’s 30-year JGB auction saw weaker demand, with the bid-to-cover ratio dropping to 3.14 from 4.04, while the tail widened to 0.15. The highest accepted yield printed at 3.457%, keeping pressure on the super-long end and reinforcing curve-steepening risks.

Japanese equities extended losses, with the Nikkei sliding for a second day amid profit-taking in AI-related names. The index also fell below the 52,000 level as trade frictions with China resurfaced, including Beijing’s anti-dumping probe into Japan’s dichlorosilane imports — a key semiconductor input.

Australia: trade data and firm RBA messaging:

Australia’s goods trade surplus narrowed sharply in November, falling to A$2.94bn from A$4.35bn, well below expectations. Exports dropped 2.9%, led by a 9% fall in iron ore, while imports edged 0.2% higher.

On policy, RBA Deputy Governor Andrew Hauser reinforced a firm stance, saying November CPI was “largely as expected” and that inflation above 3% remains too high. He reiterated that Australians have likely seen the last rate cut of this cycle, leaving February hike risk alive. The messaging supported front-end yields and helped limit downside pressure on the Australian dollar.

Korea:

South Korea’s finance ministry warned FX volatility is elevated, said won moves are disconnected from fundamentals, and pledged swift stabilisation measures if needed. Officials also flagged steps to encourage investment into local equities.

China and geopolitics

China-related risk sentiment remained mixed. Chinese markets were uneven, with Hong Kong pressured by tech weakness, while the mainland found support from a CNY 1.1tn PBoC reverse repo operation aimed at maintaining ample liquidity.

Geopolitically, reports alleging Chinese cyber intrusions into U.S. congressional staff emails added another layer of U.S.–China tension, reinforcing uncertainty around tech controls, defence policy and capital flows. The impact on markets was contained for now, but the tone remains a drag on China-linked risk assets and Asia FX.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) -1.2%
• Hong
  Kong (Hang Seng) -1.25%
• Shanghai
  Composite +0.1%
• Australia
  (S&P/ASX 200) +0.2%