Key Developments Shape Regional Currency and Commodity Flows

Financial markets across the Asia-Pacific region witnessed a session defined by policy signals, strategic interventions, and a notable surge in precious metals. The U.S. dollar exhibited broad weakness, lifting major currencies, while institutional moves in South Korea provided targeted support for the won.

Policy and Data in Focus

Japan remained a central point of analysis. The November Services Producer Price Index (SPPI) held steady at 2.7% year-on-year, meeting expectations and underscoring persistent underlying price pressures in the service sector. Concurrently, the release of the Bank of Japan's October meeting minutes garnered limited market reaction, as traders deemed them outdated following December's historic rate hike—the first in nearly three decades.

Analysts at Nomura highlighted a growing policy divergence within Asia, set against a backdrop where the U.S. Federal Reserve is anticipated to initiate its own cutting cycle later in 2026. In a related geopolitical development, Washington postponed tariffs on select semiconductors, a move interpreted as an effort to de-escalate trade tensions with China.

FX Markets: Dollar Weakness and Strategic Support

Holiday-thinned liquidity amplified currency moves, with the Dollar Index extending its weekly decline. The Japanese Yen (JPY) and Australian Dollar (AUD) were among the G10 outperformers, while the Euro and British Pound approached three-month highs.

The most dramatic move occurred in South Korea, where the Korean Won (KRW) strengthened significantly. The rally was fueled by reports that the National Pension Service (NPS) had activated strategic foreign-exchange hedging measures—a clear institutional effort to curb the currency's weakness and volatility.

  • USD/CNY Reference Rate: The People's Bank of China set the daily fix at 7.0471, notably weaker than the market estimate of 7.0240.
  • Equities: Regional stock markets traded mixed in quiet pre-holiday conditions. Japan's Nikkei 225 posted modest gains, while benchmarks in Hong Kong and mainland China were largely flat.

Commodities: Precious Metals Shine

Precious metals extended their remarkable rally. Gold futures briefly cracked the psychologically significant $4,500 per ounce barrier before retracing slightly below that level. Silver outperformed on the session, breaking decisively above $72 per ounce and continuing its sharp upward trajectory.

In energy markets, a private survey indicated an unexpected build in U.S. crude oil inventories, contrasting with analyst forecasts for a drawdown.

Broader Market Context

The session also absorbed follow-on news, including confirmation that rising bond yields are pressuring Japan's budget through higher debt-servicing costs. Furthermore, data revealed a steep decline in Tesla's sales across the UK and European markets, signaling growing challenges in the electric vehicle sector.