- Bank of Korea (BOK) warns weak won risks inflation as USD/KRW diverges from fundamentals
- Trump TACO now with pasta - backtracks on Italian pasta tariffs after industry pushback
- Australia manufacturing PMI holds 51.6 in December. Hiring accelerates & inflation firms.
- ICYMI: China slaps 55% tariff on excess beef imports under new three-year safeguard regime
- Canadian dollar outlook 2026: Tariff risks are overblown
Summary:
Asia-Pacific trade was thin but directional as markets remained in holiday mode ahead of a full return on January 5.
The U.S. dollar weakened, while precious metals surged sharply, led by gold and silver.
Gold broke above US$4,370, with silver, platinum and palladium all posting strong gains.
Australian manufacturing remained in expansion, while South Korea’s factory sector returned to growth in December.
FX moves were notable, albeit not in large ranges, with EUR, AUD, GBP and SGD all strengthening against the USD.
Professional market participants largely remained in holiday mode, a full return will happen on Monday, 5 January. Liquidity across the Asia-Pacific region was thin, but price action was nonetheless revealing, with clear directional moves emerging in FX and commodities.
The U.S. dollar lost ground nearly across the board, while precious metals extended their rally. Gold surged through US$4,370, silver rose close to 3%, and both platinum and palladium gained +3%. The strength in metals was mirrored by gains in the euro, Australian dollar and sterling. Yen traded its way, USD/JPY rose. While volumes were light, the moves had the feel of a broader macro narrative re-asserting itself rather than random holiday noise.
Looking ahead to 2026, the dollar appears vulnerable. With U.S. mid-term elections approaching, fiscal policy is likely to turn increasingly expansionary as politicians seek to support growth and equity markets. At the same time, pressure from the White House on the Federal Reserve to cut rates aggressively is expected to intensify even further. The prospect of a White House-appointed Fed chair later this year only reinforces expectations of a more accommodative policy stance. Against that backdrop, confidence in the dollar could erode further, creating a supportive environment for non-USD assets, particularly precious metals.
On the data front, mainland Chinese and New Zealand markets were closed for holidays. In Australia, December manufacturing PMI held steady at 51.6, remaining in expansion territory and confirming modest resilience in the sector.
In South Korea, Bank of Korea Governor Rhee Chang-yong warned that excessive won weakness could harm domestic businesses and add to inflation pressures. Separately, manufacturing PMI data showed the sector returning to expansion in December, rising to 50.1 after two months below the 50 threshold separating expansion from contraction, helped by a rebound in export demand.
Meanwhile, the Singapore dollar strengthened after data showed 2025 GDP growth of a robust 4.8%. Analysts cited a resilient global economy, strong export demand, some front-loading ahead of tariff pressures, and broad-based gains across key sectors for the blockbuster result and have revised forecasts upwards now.
