US stocks are trading notably higher, fueled by better-than-feared results from two economic bellwethers — FDX and NKE — plus an encouraging consumer confidence survey.

Off-cycle earnings results can attract a lot of attention due to the dearth of information coming through the pipes. The favourable results also come at a significant junction for the economy — when investors are seeking signs that the US is either headed into a recession or the Fed is successfully engineering a soft landing.

The market is coming around to the notion that we will have a more orthodox 2023, including a much more balanced Fed that is looking to slow the pace of hikes amid better news on inflation.



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As the market starts to fret about the second-round supply effects from the upcoming cold snap set to spank much of the US with some of the most frigid temperatures of the season, Oil prices rose by more than $2 on Wednesday after data showed a much larger-than-expected draw in US crude stockpiles. Adding to the bounce, US consumer confidence surprisingly perked up, offsetting some of the demand drag from last week’s shoddy retail sales print.

Indeed the bullish momentum continues to take oil markets by storm, literally as wintertime energy demand realities set in.

And despite all the economic fear and recession hype, oil continues to find buyers proving itself as a critical necessity in life.

Nat Gas prices also rocketed by more than 4% on Wednesday as a Cyclone Bomb looks to envelop the United States in freezing temperatures by Christmas.

With 2022 nearing its close, the most considerable development for the oil market in the Asia-Pacific region in the past month has been Chinese policymakers’ shift to refocus on growth which, to a large degree, is supporting the underbelly of the oil rally. Most noticeably, there has been an abrupt easement of Covid policies, with testing requirements reduced, permission for infected people to quarantine at home, and efforts to ensure that cities don’t overply restrictions. Tacitly, policymakers have decided to accept a sizeable Covid wave. All of which  points to a sizable breakout in oil prices in 2023 when China accelerates the reopening after the 2nd or 3 rd Omicron wave subsides in Q1


With everyone and their pet cat now long JPY, the negative holiday carry and year-end turn, not to mention improving risk sentiment, suggest a sub 130 USDJPY is not entirely on the holiday cards just yet; hence markets could turn year-end/month-end transactional.

But crucially, moves higher on USDJPY could be a fader’s delight as there’s unambiguous evidence that a large chunk of the proceeds from unhedged bond sales has been parked offshore, which could now flow back to Japan and boost the yen.

As for the rest of G-10, Asia walks into the sound of Christmas crickets.

Still, traders are keeping an eye on the zero-Covid exit ramps in China and developments in the energy markets.


The speed and sequencing of the reopening will ultimately drive the bus, and the key for CNH is how much stimulus is added in 2023, encouraging equity inflows.

As the peak inflation narrative gets more baked in, we should see increased demand for Asia FX. And within the geographies and outside of the CNH, we like KRW, THB and MYR.

THB is supported by a hopeful return to a healthy current account surplus position, helped by the tourism recovery and lower freight costs. Thailand is one of the few markets where growth should be more robust next year than this.

In addition to the reopening play, stability in the newly formed government could help widdle away political discounts embedded into the MYR for the past several years.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT