Data/Event Risks
- USD: No releases today as public holiday (Martin Luther King day). Tomorrow sees the latest existing home sales figure, and Chicago & Richmond Fed activity indices. Dollar is likely to be shaped in part by perceived progress in debt ceiling discussions.
- GBP: Little to ponder today. CBI trends survey out tomorrow. Wednesday is the big day, with labour market data and the latest BOE Minutes. Soft figures may provide sterling bears with further ammunition.
- EUR:German and EC ZEW survey due for release tomorrow, followed by French business surveys on Wednesday.
Idea of the Day
Those with yen positions are eagerly awaiting the outcome of Tuesday’s BOJ meeting. The politicians have trampled all over BOJ independence – on Friday, BOJ Chief Shirakawa met with new Finance Minister Aso, with the latter pressing for the Japanese central bank to adopt a higher inflation target and accelerate the pace of asset purchases. The risk for yen shorts is the onset of profit-taking after the meeting. Some evidence of this type of activity has emerged over the last few hours, with USD/JPY dropping back to 89.45 at one stage from a new high of 90.25.
See more in the USDJPY forecast.
Latest FX News
- EUR: Ran into some serious profit-taking on Friday after yet another unsuccessful attempt to crack 1.34. This level seems a tough one to crack, especially with some profit-taking taking place in EUR/JPY. The latter fell to near 119 overnight, from a high of 120.24.
- JPY: Yen shorts have their collective fingers crossed that the BOJ don’t disappoint tonight. That said, they were encouraged on Friday by Japanese politicians and advisors extolling the virtues of further yen weakness.
- GBP: Down in the doghouse still alongside the yen and the Swissie. The Euro-repatriation story is hurting sterling, as is continuing economic sclerosis. Jobs figures need to be robust on Wednesday or else the pound will slide further.
- USD: Thankfully, the Republicans seem to be redacting from their hard-line stance on the debt ceiling, which provided the dollar with a minor boost on Friday. Dollar has been creeping high in recent trading sessions.
- CHF: Friday was the best day for the CHF this year, with shorts scrambling for neutrality amidst a merciless squeeze. EUR/CHF peeled back from an earlier high of 1.2570 to near 1.24, now 1.2435.
Further reading: EURUSD: 1.3200-1.3400 Consolidation (Elliott Wave Analysis)
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