ForexLive Asia-Pacific FX news wrap: Airstrikes on Houthis, escalation takes oil higher

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The
news today in Asia was dominated by US and UK airstrikes against
Houthi targets in Yemen. Despite being warned off attacking merchant
shipping in the Red Sea Iran-backed Houthi terrorists had been
accelerating their assaults. US and UK strikes to secure safety and
free passage for shipping vessels were targeted
at radar
installations, storage sites and missile launchers. The
strikes were made by fighter
jets based on the USS Eisenhower aircraft carrier, as well as
Tomahawk missiles launched from submarines and surface ships. UK
fighter aircraft based in Cyprus took part. Support
was given by Australia, the Netherlands, Bahrain, and Canada.</p><p>Financial
markets responded mainly in a very subdued fashion. The yen rose.
USD/JPY is trading under 145.00 as I post. Oil rose as well,
extending its Thursday gains.
</p><p>On
the data front the focus was on Chinese inflation data for December
(we had trade data for the same month also). About the best that can
be said for the inflation numbers is that while consumer
price deflation
extended
into a third month it eased
a little. The
PPI, ‘wholesale’ level inflation, remained in deep and persistent
deflation.</p><p>The
People’s Bank of China will set its Medium-term Lending Facility
(MLF) on Monday. There are widespread expectations of a 10bp cut, see
bullets above for more on this.
</p>

This article was written by Eamonn Sheridan at www.forexlive.com.