Global Markets:

  • Asian stock markets: Nikkei down 0.50 %, Shanghai Composite up 1.30 %, Hang Seng gained 1.00 %, ASX down 0.10 %
  • Commodities: Gold at $1228 (-0.10 %), Silver at $17.18 (+0.10 %), Crude Oil at $80.60 (-0.50 %)
  • Rates: US 10 year yield at 2.252, UK 10 year yild at 2.216, German 10 year yield at 0.873

News & Data:

  • Japan Retail Sales YoY 2.3 %, Expected: 0.6 %, Previous: 1.2 %
  • BOJ Kuroda: CPI likely to pick up in 2nd half of this fiscal year, CPI likely to reach 2% around mid of projection period
  • BOJ Kuroda: BOJ discussing exit strategy internally, not appropriate to discuss BOJ exit strategy externally
  • BOJ Kuroda: Inflation expectations moving at quite high level, Japan break-even rate has been flat recently
  • BOJ Kuroda: CPI forecast could change as it reflects price data, prices likely to reach 2% in period centered on 2015 fiscal year
  • BOJ Kuroda: BOJ will continue to keep stability in market, don’t think liquidity in bond market extremely low
  • Crude Oil declined to a new low on Monday (79.44) which was last seen in June of 2012.

Markets Overview:

The USD weakened yesterday after weaker than expected econ data (Services PMI & Pending Home Sales) and the S&P 500 closed the day 0.15 % lower. Asian stock indices are mixed again, with the Nikkei and ASX in the red, but Shanghai Comp & Hang Seng up more than 1 % on the day. We had some comments from BoJ Governor Kuroda overnight, but he didn’t say anything new. It was quiet data-wise, with Japanese Retail Sales the only notable data print. Today, Durable Goods Orders will be in the focus, and Consumer Confidence & Richmond Manu Index data shortly after that.

In FX, USD/JPY declined from the 107.97 highs towards 107.75 as the Nikkei opened lower. Dealers have also seen the usual exporter selling ahead of the big figure. The next major layer of bids is reported to be at 107.30/40 and should hold ahead of the FOMC, unless we’ll see a big miss in US data today. To the topside, stops are building through 108.10, while offers solid from 108.20 to 108.25. The major s/t resistance level remains at 108.40.

EUR/USD traded 1.2695-1.2715 overnight. Also, there is a €750 million option expiry at 1.2650 for today’s NY cut. Bids noted from 1.2660 to 1.2650 and in better size towards 1.2620 from leveraged names. Stops in good size through 1.2640 and again 1.2630. To the topside, 1.2720 proved again as solid s/t resistance level yesterday. Should it fail to break above soon, it seems likely we’ll go for the downside stops and a test of 1.2620.

Flows in the commodity currencies were light in Asia. AUD/USD remains stuck in the 0.8720-0.8830 range and it seems there is a small chance of an end of the consolidation until the FOMC tomorrow. Bids reported at 0.8780 and in better size at 0.8730 to 0.8720. To the topside, offers resting ahead of 0.8850 with large stops above. The Loonie weakened as Oil prices collapsed again, taking USD/CAD to 1.1250. Dealers note 1.1180 and 1.13 as the major levels and see little interest inbetween.

Upcoming Events:

  • 12:30 GMT – US Core Durable Goods Orders (0.5 %)
  • 12:30 GMT – US Durable Goods Orders (0.6 %)
  • 12:55 GMT – US Redbook
  • 14:00 GMT – US CB Consumer Confidence (87.0)
  • 14:00 GMT – US Richmond Manufacturing Index (11)
  • 17:30 GMT – UK MPC Member Cunliffe speaks