Asian Markets Lower On Fed and China, Dollar Firm

Asian markets outside Japan are broadly lower as the week starts. Friday's job data reinforced the chance that the Fed will taper the asset purchase later this year. Sentiments were weighed down by China's plan to cut off credit to some companies to reduce over-capacity. In the currency markets, the USD/JPY edged higher to 101.53 and to extend the rebound from 93.78. The USD/CHF also edged higher to 0.9665. Meanwhile, EUR/USD and GBP/USD are held above last week's low but remains soft. Economists are expecting Fed to taper the asset purchases in September. Meanwhile, the ECB, BoE and BoJ are expected to hold on to the ultra ease policies. The contrasting policy path will likely support dollar in near term.

In Europe, Greek finance minister Stournaras expressed optimism that he can close a deal with troika, received the approval of the eurozone's finance ministers at a meeting in Brussels. The approval will let Greece secure a EUR 8.1b payment, which is part of the EUR 240b bailout program. The IMF's lead negotiator for the program, Thomsen, said that very good progress was made and an agreement could be concluded before today's Eurogroup meeting. A statement is expected before tomorrow's European open.

Ex ECB president Trichet commented regarding Draghi's pledge to keep rates low for an "extended period of time". While this broke away from Trichet's practice, he noted that forward guidance will also remain "conditional". Trichet also said even if it's not the best concept, "it's probably difficult to be isolated in a constellation of central banks that are all embarking on forward guidance." Trichet also noted that the "way more important" part of the announcement is that the ECB didn't exclude the possibility of going lower than the current 0.50% historical low.

On the data front, Japan's current account surplus narrowed to JPY 0.62T in May. The Eco watcher survey will be released later today. The Swiss will release unemployment data, the eurozone will release Sentix investor confidence, Germany will release trade balance and industrial production. Canada will release data for building permits.