Global Markets:

  • Asian stock markets: Nikkei down 0.05 %, Shanghai Composite gained 1.65 %, Hang Seng up 1.60 %, ASX declined 0.20 %
  • Commodities: Gold at $1205 (+0.05 %), Silver at $16.38 (+0.05 %), WTI Oil at $51.85 (+0.40 %), Brent Oil at $59.05 (+0.15 %)
  • Rates: US 10 year yield at 1.935, UK 10 year yield at 1.589, German 10 year yield at 0.149

News & Data:

  • New Zealand Business Confidence 23 %, Previous: 24 %
  • UK Retail Sales Monitor 3.2 %, Previous: 0.2 %
  • Australia NAB Business Confidence 3.0, Previous: 0.0
  • Singapore MAS Keeps Policy On Hold, Says Current Policy Is Appropriate
  • Singapore GDP 1.1 % q/q, Expected: 0.2 %, Previous: 4.9 %
  • Singapore GDP 2.1 % y/y, Expected: 1.7 %, Previous: 2.1 %
  • Bank Of Japan Watches For Impact Of Strong Dollar — Nikkei
  • Bank of Japan Must Focus More On Employment, Says Top Economic Adviser — Nikkei
  • Japan Economic Minister Amari: Will Leave It To Markets To Decide IF Currency Swings Represent Fundamentals — RTRS

 

Markets Update:

The Japanese Yen strengthened overnight after comments from a top economic adviser to Japanese Prime Minister Abe. Hamada said that the Yen has weakened too much and that an USD/JPY exchange rate of 105 would be more appropriate. While Japan has benefited a lot from their weakening currency, it is clear that officials are concerned about excessive weakness. However, this has rarely stopped a strong trend. USD/JPY positioning is much less crowded than it was last year, which should make it easier to push the pair higher once the timing is right.

EUR/USD is struggling after it failed to sustain momentum above 1.06 yesterday. Offers in good size are reported at 1.0620 and better selling interest is expected in the 1.0670/80 area. To the downside, intraday support eyed at 1.0520 with option-related demand reported ahead of the 1.05 level. It is unlikely that we will see a larger move ahead of the ECB meeting tomorrow, so further consolidation between 1.05 and 1.0650 seems probable.

The commodity currencies recovered slightly in the APAC session. The Australian Dollar was boosted by better than expected Business Confidence data, which lifted the Kiwi Dollar as well. AUD/USD upside is likely to be limited ahead of the Chinese GDP tomorrow and solid resistance is seen at 0.7630/40.

Looking ahead, we have a good amount of econ data release today. In the EU session, the focus will be on UK inflation data, while in the US session, we’ll get US retail sales and PPI data.

Upcoming Events:

  • 07:00 BST – Swedish Unemployment Rate
  • 07:00 BST – German WPI (0.2 % m/m)
  • 08:00 BST – Spanish CPI (0.6 % m/m, -0.7 y/y)
  • 08:00 BST – Spanish HICP (2.1 % m/m, -0.7 y/y)
  • 08:30 BST – Swedish CPI (0.2 % m/m, 0.3 % y/y)
  • 09:00 BST – Italian CPI (0.1 % m/m, -0.1 % y/y)
  • 09:30 BST – UK CPI (0.2 % m/m, 0.0 % y/y)
  • 09:30 BST – UK Core CPI (1.2 % y/y)
  • 10:00 BST – Euro Zone Industrial Production (0.3 % m/m, 0.7 % y/y)
  • 13:00 BST – FOMC Member Kocherlakota speaks
  • 13:30 BST – US Core PPI (0.1 % m/m, 0.9 % y/y)
  • 13:30 BST – US PPI (0.2 % m/m, -0.7 % y/y)
  • 13:30 BST – US Retail Sales (1.0 % m/m)
  • 15:00 BST – US Business Inventories (0.2 % m/m)