Japan Tertiary Industry Activity Index 0.3 %, Expected: -0.6 %, Previous: 0.7 %
Japan Reuters Tankan Index 12.0, Previous: 16.0
China makes big cut in bank reserve requirement to fight slowdown
ECB’s Draghi rejects talk of Greek exit
China considers implementing an ECB type credit move to boost liquidity: WSJ
CFTC Positioning Data:
EUR net short 212K vs short 215K prior
JPY net short 23K vs short 24K prior
GBP net short 36K vs short 34K prior
AUD net short 42K vs short 29K prior
CAD net short 31K vs short 30K prior
CHF net short 0K vs long 0K prior
Over the weekend, China cut the bank reserve requirements. The move was expected, but came a bit earlier than analysts expected. While most of the major currencies slightly weakened against the US Dollar overnight, the Australian Dollar gained on further Chinese stimulus. Immediate resistance seen at 0.7840, but the next major hurdle lies at 0.7940. A clear break above that level could lead to a larger short squeeze above 0.80. Meanwhile, the Kiwi Dollar initially dropped on weaker than expected inflation data, but quickly rebounded and traded higher along with the Aussie Dollar. Next major resistance seen at 0.7890, which is the current yearly high.
Looking ahead, it could be a rather quiet day in FX, given the lack of data/events. In the European session, the German PPI is the only notable data release. In the US session, there will be no tier 1 or 2 data releases, but BoC Governor Poloz will speak, followed by RBA Governor Stevens later in the day.