- According to Juncker, the euro exchange rate is dangerously high.
- EUR has weakened overnight and JPY has continued to strengthen on the back of yesterday's comments from Japan's Minister of Economics.
- Main focus today US CPI, Fed's Beige Book and Q4 earnings.
EUR last night weakened after Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro area finance ministers, said that "the euro foreign exchange rate is dangerously high." Juncker’s comment underscores that the campaign by the new LDP-government for a weaker yen is not unproblematic and could fuel a currency war.
JPY continued to strengthen overnight after comments from Japan’s Minister of Economics Amari were interpreted by some in the market as indicating that the Japanese government is not interested in a too fast deprecation of JPY. Better than expected machinery orders in Japan for November also gave some support to JPY.
The US stock market edged slightly higher yesterday supported by strong retail data for December but Monday’s press reports about Apple (AAPL) cancelling component orders due to disappointing sales continued to weigh on the market. S&P 500 closed up 0.1% while the technology-heavy Nasdaq closed down 0.2%.
Asian stock markets are lower this morning. Japan is markedly lower with Nikkei down 2.4% mainly on the back of the stronger yen. Other Asian stock markets are also mostly lower as it appears we are seeing some profit taking after recent strong performance. China’s Shanghai composite is down 1.9% and Hong Kong’s Hang Seng is down 0.7%.
US bond yields edged slightly lower in Asian trade on the back of the gradually more negative sentiment in the stock market but 10-year- US bond yields have only declined by 1bp to 1.81 since market close in Europe yesterday.
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