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With  US equity markets at all-time highs  and the  VIX at lows not seen since  February of 2007 after the  positive  Non-Farm  Payrolls report on Friday, Asian  stocks followed suit and traded higher over the course  of their  Monday session, buoyed by optimistic sentiment from Wall Street and  stronger than expected GDP  numbers out of Japan.   The Nikkei climbed by 0.31% as Q1 GDP for the Japanese economy was revised to an annualized increase of 6.1%, up from the original print of 5.9%, and higher than the 5.6% analysts had been expecting.    The robust figures to begin 2014 are  set to moderate as the second  quarter sees growth contract under the weight of the newly introduced sales tax, yet the better than expected numbers from Q1 will keep the Bank of Japan at bay with further stimulus increases  likely until the first economic results for Q3 start trickling in; making it more realistic that it could be closer to the end of 2014  until we see further action (if any) from the BoJ.  The Yen traded within a narrow range for the majority of the overnight session, continuing to pivot around the unchanged mark in the mid-102s leading into the North American open.

There is little to report on in terms of news flow from across the Atlantic, with the bank holiday  Whit Monday in parts of Europe detracting from trade flow and leading to a sparse economic calendar.    EURUSD is consolidating towards the 1.3600 handle after a volatile end of the week  courtesy of the ECB announcement, though things should calm down for the pair considering the upcoming week is fairly sparse for Euro-centric economic events.
Heading into the North American open, S&P futures are telegraphing a slightly negative open that could see stocks give back  some of Friday’s gains, though the  trimming of risk is modest at best.   10-year US treasury yields are continuing to  be well supported north of the 2.6% handle, while the commodity-block currencies like the Aussie and Loonie are also finding some supportive bids this morning.   Housing starts in Canada for the month of May came in with an annualized reading of 198k,  just edging out the reading on new homes under  construction for April, and over 10k above the median analyst forecast for the measurement month.   USDCAD is  moving lower from its  Friday close, but still contained with the low-1.09s.  
The Week Ahead…

After a week chalked full of central bank policy meetings and employment data, the upcoming week is expected to be less onerous on market participants, with the economic docket unlikely to greatly alter policy expectations.   The  new week should allow some time for participants to digest the developments of the previous one, while providing supportive  evidence for  developed  economies well entrenched  along their monetary policy  paths –  although a  few exemptions to the aforementioned statement could be in the cards.

While  the  last few days have been busy for Western economies,  the next few will be important for witnessing how the Chinese government is navigating the stabilization of its economy, as The Red Dragon  sees trade balance, consumer prices, and industrial production figures, all hit the wires throughout the week.   Trade balance figures for the month of May were released over the weekend, and does support the view offered by the recent string of modest PMI improvements that orders are picking up and there is signs of stabilization for the Eastern superpower.   The trade surplus widened by a greater amount than had been expected, printing at $35.9bn after exports increased at a faster than expected clip of 7.0% on a y/o/y basis, while imports moderated and slipped by 1.6% compared to the last twelve months.   The temperance of imports is not an  encouraging signal for  export driven economies such as Australia and Canada that rely on China’s demand for commodities, though the optimistic progression of export growth bodes well for the hypothesis  that China will  be able to follow through on its promises of a soft landing, and as such we’re seeing  growth-correlated  currencies outperform this morning.   Tomorrow night we will see  consumer prices numbers hit the wires, with an expectation May comes in with  an increase of 2.4%  on  a y/o/y basis; a fairly comfortable level that shouldn’t worry the government about cracking down on targeted measures to help stoke regional lending.  

Changing pace from an economy that is doing its best to stabilize to one that is looking ready to take off, employment figures for the UK are set to drop on Wednesday, with more improvement in the labour market expected to emerge.   The claimant count for May is forecast to drop by another 25k bodies, while the unemployment rate in April is expected to slide to 6.7%, and if both numbers come in on target, should elicit further speculation more hawks will begin to materialize at the BoE, which could lead to dissent later in the year.   That being said, like the North American numbers on Friday, the nuances of the report will be key to watch, as average weekly earnings are forecast to moderate to 1.2% on a y/o/y basis, and thus could give Carney a bit of breathing room when it comes to inflationary pressures and his time-line for interest rate hikes.   Even so, subdued weekly earnings are unlikely to drastically change the trajectory of the Pound given its current environment, with GBPUSD looking to have completed its corrective price action in the high-1.66s, thus potentially getting ready for another assault of the 1.70 level where it was rebuffed in early May