At a glance:

AUD strengthened after solid Australian employment data

Unemployment fell for a fourth straight month; hours worked rose 0.6%

RBA March hike expectations firmed, though not locked in

Japan machinery orders surged 19% m/m, supporting capex outlook

Iran strike rumours persisted

Korea’s KOSPI hit a record high

The Australian dollar was the standout mover during the session, gaining ground as markets leaned further toward the possibility of a Reserve Bank of Australia rate hike at its March 16–17 meeting following another firm labour market report.

Headline employment rose modestly, but the underlying detail reinforced the message of a still-tight labour market. The number of unemployed fell for a fourth consecutive month, a sequence last seen in the four months immediately preceding the RBA’s May 2022 rate-hike cycle. Hours worked also climbed 0.6% in January, pointing to solid labour demand.

The data do not lock in a March move, but they keep the RBA’s tightening bias intact. AUD/USD climbed from around 0.7040 to just above 0.7070 before retracing a good portion of the move later in the session.

USD/JPY edged higher in relatively light news flow. However, Japanese data delivered a standout surprise, with core machinery orders jumping more than 19% month-on-month in December, far exceeding expectations for a 4.5% rise. The capex indicator supports the Bank of Japan’s outlook for continued economic expansion, even as fiscal and currency dynamics remain in focus. In other data Japanese equites were reported to have seen their biggest weekly foreign inflow in four months, and their eighth consecutive weekly net purchase.

Elsewhere, geopolitical chatter persisted around the possibility of a US strike on Iran, with reports suggesting this weekend remains under consideration. The headlines added a layer of caution to broader risk sentiment.

In equity markets, South Korea’s KOSPI surged to a record high as trading resumed following a three-day holiday. Mainland China and Hong Kong markets remained closed, keeping regional liquidity thinner than usual.