Yen roars back as US consumer engine sputters

• U.S. core retail sales rose only 0.1% in December with downward revisions for October and November, prompting Treasury rallies and increased rate cut expectations
• January payrolls expected to show 70,000 jobs added versus 50,000 in December, with potential revisions showing hundreds of thousands fewer jobs created through March
• Commonwealth Bank of Australia surged 7.8% on strong earnings while TSMC's gains pushed Taiwan's market to a record high before Lunar New Year

Market Summary: Yen Strengthens as US Consumer Data Disappoints

The Japanese yen surged over 2.5% following Prime Minister Sanae Takaichi's landslide election victory Sunday, with traders anticipating potential currency policy shifts. This rally coincides with weakening US economic indicators raising concerns about consumer health.

Key Economic Data:

December US core retail sales rose just 0.1%, missing expectations, with October and November figures revised downward. This weak consumer spending data prompted Treasury rallies and increased rate cut expectations. January employment data is expected Wednesday, with payrolls projected at 70,000 (up from 50,000 in December) and unemployment holding at 4.4%. Importantly, revisions covering the year through March could reveal hundreds of thousands fewer jobs than initially reported.

Market Reactions:

In Asia, Taiwan Semiconductor drove MSCI's Asia ex-Japan index up 1.3% ahead of the Lunar New Year break. Commonwealth Bank of Australia soared 7.8% on strong earnings, while CSL faced pressure following CEO Paul McKenzie's retirement announcement.

Corporate Earnings:

Major European companies reporting Wednesday include TotalEnergies, Siemens Energy, Deutsche Boerse, Heineken, Schindler, and EssilorLuxottica.

Market Implications:

Weakening US consumer data could impact retail stocks like Walmart, which recently benefited from rotation away from AI-related equities. The combination of disappointing retail sales, potential job market weakness, and yen strength suggests shifting sentiment regarding US economic resilience and Federal Reserve policy direction. Markets are closely monitoring whether consumer weakness represents a temporary softness or signals broader economic concerns.