No stopping EURJPY

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GBP: Industrial production data is expected to show a modest rebound (0.4% MoM) from the sharp 1.2% decline seen in the January data. Market keenly focused on whether GDP expanded in the first quarter after Q4 decline (-0.3%). Sterling would find comfort in stronger than expected release. Update: UK Manufacturing Production Rises +0.8% – GBP/USD Leaps

USD: Low risks from the data side today with just Wholesale Inventories, which is not a market-mover for the dollar.

Idea of the Day

The ripples from the Bank of Japan decision last week are still being felt in the FX markets.  The Yen has depreciated more than 6% against the dollar since that event, with USDJPY not far from touching the 100 level (last seen four years ago).  There have also been more noises from the Finance Minister suggesting that yen weakness has further to go. One of the main implications has been the impact on the single currency, EURJPY having moved nearly 9% since the BoJ decision to dramatically expand its balance sheet.  Both USDJPY and EURJPY traded just shy of 100 and 130 overnight and both these levels will be in focus today.

Latest FX News

GBP:  A couple of more positive pieces of economic news overnight. The BRC survey showed Like-for-Like sales rising 1.9% YoY, softer than the February reading of 2.7%, but better than expected by the market.  The RICS house price balance showed an improvement to -1 (from -7) suggesting better housing market conditions.

JPY:  The yen reached a high of 99.66 overnight, as Finance Minister Aso noted that the yen is still correcting.  The yen has now corrected 6% vs. the dollar since the Bank of Japan meeting last week. USDJPY above 100 was last seen four years ago.

EUR: Pushing higher during the Asia session to 1.3068 vs. the USD but meeting some selling pressure thereafter.  EURJPY was just short of the 130 level (129.94), a level last seen in January 2010.

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