Nomura highlights policy divergence in Asia as the Federal Reserve is expected to cut rates twice in 2026.

Washington has postponed semiconductor tariffs in an effort to negotiate a trade truce with China.

South Korea’s won strengthened notably after the National Pension Service activated strategic foreign-exchange hedging to reduce won volatility and curb weakness.

The People’s Bank of China set the USD/CNY reference rate today at 7.0471, higher than the estimated 7.0240.

In other news, Tesla sales have sharply declined in the UK and Europe as the electric vehicle market faces increasing challenges.

Japan’s policymakers flagged inflation persistence and concerns over asset-price risks in the minutes from the Bank of Japan’s October meeting. The Bank of Japan also released its November Services Producer Price Index (PPI) which came in at 2.7% year-on-year, matching expectations and the prior month’s figure.

Rising yields are forcing Japan to plan for higher debt-servicing costs.

A recent private survey on oil inventories revealed a crude oil build, contrary to expectations of a draw.

Asia session summary:

Japan’s November Services PPI confirmed ongoing inflationary pressures in the services sector at 2.7% year-on-year. However, the October BOJ minutes drew little attention as they preceded December’s significant rate hike—the highest in around 30 years.

In the foreign exchange market, broad US dollar weakness dominated trading. The dollar index continued to weaken in relatively quiet, holiday-thinned conditions, extending earlier losses and pushing several G10 currencies to session highs. The Japanese yen strengthened further, underpinned by recent government statements expressing concern over excessive yen weakness. The Australian dollar also gained, while the euro and sterling moved toward three-month highs.

South Korea’s won was the standout Asian currency, strengthening sharply after news that the country’s pension fund implemented strategic FX hedging, providing notable institutional support.

Asian equity markets experienced mixed, range-bound trading amid light volumes as market participants prepare for the Christmas break. Japan’s Nikkei 225 edged higher, while Hong Kong’s Hang Seng and the Shanghai Composite remained largely unchanged. US equity futures traded quietly overnight, holding around flat levels in narrow ranges.

In commodities, precious metals extended their recent gains. Gold briefly rose above US$1,950 before retreating slightly below that level, while silver surged decisively above US$72, outperforming in the session.

Original Source: Eamonn Sheridan of investinglive.com