Good morning and welcome back to FirstFT Asia. In today’s newsletter:
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Yen leaps on intervention rumours
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Trump faces growing backlash over ICE
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Starmer’s China charm offensive
The dollar sank to a four-month low yesterday and gold surged above $5,000 a troy ounce for the first time, as speculation over potential joint US-Japan action to support the yen piled further pressure on the US currency. Here’s what you need to know.
Currency swings: The yen climbed 1.1 per cent to ¥154 to the dollar, extending its gains from a volatile session on Friday that included a “rate check” of market participants by US authorities, a move that is often a precursor to foreign-exchange market intervention. The dollar, which analysts said was also suffering from concerns over a potential US government shutdown, fell 0.7 per cent yesterday against a broader group of major currencies, extending the losses sparked by last week’s Greenland crisis.
Gold tops $5,000: Gold prices climbed more than 2 per cent, setting a new record above $5,100 a troy ounce, as a weaker dollar and continued concern about erratic US policymaking triggered a scramble for precious metals. Global “uncertainty levels are high”, said Michael Haigh, analyst at Société Générale, pointing to recent events in Venezuela, Greenland and Iran as factors that had driven investors to traditional haven assets, such as bullion.
A yen intervention? The surge in the yen has come as traders speculate that the US and Japan could be lining up their first co-ordinated intervention in the currency since the G7 acted to weaken it after the 2011 earthquake. One analyst told the FT it was “highly likely” that the Japanese authorities had already directly intervened in the market. Read the full story.
Here’s what else we’re keeping tabs on today:
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Economic data: China reports December industrial profits and Japan publishes services PPI inflation data for the month.
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EU-India trade deal: India is expected to sign a long-awaited trade agreement with the EU at a summit in New Delhi.
Five more top stories
1. Donald Trump is deploying his border tsar to Minnesota as a backlash grows against his administration’s immigration crackdown after federal agents shot and killed a second person in Minneapolis over the weekend. The US president also appeared to extend an olive branch to Democratic leaders in Minnesota, saying he had had spoken to the state’s Democratic governor, Tim Walz, in a very good call”.
2. Europe is “dreaming” if it believes it can defend itself without US backing, Nato’s secretary-general has warned, pushing back against calls in some EU capitals to prepare for a future without Washington’s protection. Here’s why Nato chief Mark Rutte dismissed the notion of “strategic autonomy”.
3. Investors in western biotechs face the prospect of lower valuations as Chinese start-ups attract growing investment from global drugmakers looking to replenish their pipelines. China has emerged in recent years as a hub for drug development, particularly early-stage candidates.
4. The US Treasury department said it was cancelling its contracts with the consulting firm Booz Allen Hamilton, as punishment for the leaking of Trump’s tax returns and the confidential filings of thousands of other wealthy individuals. The leaks by a former Booz Allen employee during the first Trump presidency shone a harsh spotlight on the tax strategies of billionaires from Elon Musk and Jeff Bezos to Warren Buffett.
5. A former Citigroup managing director is suing the bank over claims its human resources department forced her out after she was sexually harassed by one of the bank’s most senior executives, Andy Sieg. The filing comes after Citi completed an investigation into alleged bullying by Sieg earlier this year. Here are more details.
News in-depth
Sir Keir Starmer will head to China this week on the first visit by a British leader for eight years, determined to improve what he has described as a “hot and cold” relationship. For Beijing, the Starmer meetings offer a prime opportunity to draw another critical US ally closer after the visit by Canada’s Mark Carney to the Chinese capital this month, at which the two countries cast aside their previously frosty relationship.
We’re also reading . . .
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Chinese tech: As China continues to move up the technology ladder, the question is how Beijing will try to control global tech flows, writes Kyle Chan.
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Ukraine war: Trilateral peace talks over the weekend seem promising, writes Gideon Rachman, but territory remains a major obstacle.
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People matter: The AI era is more likely to ease the coming labour shortages than trigger mass unemployment, writes Ruchir Sharma.
Chart of the day
China plans to hire the largest number of tax officials in more than a decade this year, as Beijing steps up taxation reform and tries to strengthen enforcement amid a widening budget deficit.
Take a break from the news . . .
Is marathon running actually safe? Medical experts spoke to HTSI about the pros and cons of pushing yourself to the brink.
Read the full article here