Development in oil prices remained the main driver in the financial markets. Iran showed supports on the deal between Russia and some OPEC members to freeze oil output. Yet, it refrained from joining the freeze. Nonetheless, oil prices rallied on better sentiment. The front-month WTI crude oil contract soared 5.58% while the Brent contract jumped 7.21%. In addition, risk sentiment was also lifted by January's FOMC minutes which echoed recent Fed comments that another rate hike in March is remote. WTI is back above 31 handle at the time of writing while Nikkei rose 360 pts or 2.28%. Reactions in the currency markets are relatively muted. Canadian dollar is taking the lead as the strongest major currencies follow oil prices. Swiss Franc and Sterling are the weakest ones.
In the FOMC minutes for the January meeting, Fed unveiled that more members saw downside risks to the economic outlook. Policymakers would need more time to gauge the impact of the financial market turmoil since the turn of the year on US' growth outlook. According to the minutes, "developments in commodity and financial markets as well as the possibility of a significant weakening of some foreign economies had the potential to further restrain domestic economic activity… Participants judged that the overall implication of these developments for the outlook for domestic economic activity was unclear, but they agreed that uncertainty had increased, and many saw these developments as increasing the downside risks to the outlook". On the monetary policy stance, policymakers affirmed that future monetary decision would be dependent on incoming data. as noted in the minutes, the members continued to expect that "gradual adjustments in the stance of monetary policy would be appropriate". Yet the timing and pace of adjustments "will depend on future economic and financial market developments". More in Fed Sees Tightening Factors On Financial Conditions, Other Than Rate Hike.
Aussie is relatively unbothered by the weak employment report. The job market in Australia contracted -7.9k in January, much worse than expectation of 12.9k growth. Full time jobs dropped by as much as 40.6k and overwhelmed the 32.7k growth in part time jobs. Unemployment rate also jumped to 6.0% versus expectation of being unchanged at 5.8%. Meanwhile, there were continuous doubts on the reliability of the data. Also released in Asian session, New Zealand PPI inputs dropped -1.2% qoq in Q4 while PPI outputs dropped -0.8% qoq. Japan trade surplus widened slightly to JPY 0.12T in January. China CPI rose to 1.8% yoy in January while PPI rose to -5.3% yoy.