NEWS / Foreign Exchange

Further Weakness in JPY as G7 Remains Passive

EURJPY making new highs after the G7 not commenting on the weak JPY. Asian stocks rose on back of the improved currency conditions for exporters. Watch GBP PPI at 08:30 and US Retail Sales at 14:30GMT

Overnight News Bullets

• FR CPI MoM/YoY (Mar) out at 0.4%/1.2% vs. 0.5%/1.2% expected.
• IT CPI MoM/YoY (Mar F) out at 0.2%/1.7% as expected.
• E-Z Industrial Production (Feb) out at 0.6%/4.1% vs. 0.4%/4.1% expected.
• US Trade Balance (Feb) out at -$58.4B vs. -$60.0B expected.
• US PPI MoM/YoY (Mar) out at 1.0%/3.2% vs. 0.7%/3.0% expected. Core PPI at 0.0%/1.7% vs. 0.2%/1.8% expected.
• US U. of Michigan Confidence (Apr P) out at 85.3 vs. 87.5 expected.
• US Baker Hughes Rig Count at 1758 vs. 1726 prior.
• UK Rightmove House Prices MoM/YoY (Apr) out at 3.6%/15.0% vs. 1.5%/12.2% prior.
• JN Industrial Production MoM/YoY (Feb F) out at 0.7%/3.1% vs. -0.2%/2.6% prior.
• JN Capacity Utilization (Feb F) out at 106.3 vs. 106.1 prior.
   

Markets

• FX: EURJPY making new highs at 162.43 after the G7 not commenting on the weak JPY.
• Fixed Income: Going lower in both the EU and the US. JGB??™s also following lower.
• Stocks: Europe posting decent gains. US also higher, S&P at key resistance. Nikkei up 1.7%.
• Commodities: Precious metals still leaning higher. Oil fell on Friday, but has come back o/n.

O/N Data Heat map:

Calendar

Today's Highlights:

This and Next Week??™s Highlights:

What's going on?

• The G7/IMF meeting this weekend neglected to change the language on the JPY which leaves the uptrend in carry trades intact for now. European officials seemed confident the European growth expansion was to continue despite the current levels for the EUR against majors.
• Big week ahead for the Pound as both PPI, CPI and BoE minutes is within the next three days. Gilts has priced in an additional two hikes in for the next three meetings, we still feel we haven??™t seen that in the FX market, so something has to happen. We prefer the bullish side.
• Last three days provides a bullish backdrop for equities in the short-term. Risk appetite is as high as ever following the correction six weeks ago. ECB speak and UK housing data overnight have the market looking higher this morning.

FX