Iwata Nomination Uncertainities:Waiting For Resumed Yen Selloff

Yen stays in tight range in the Asian session today, after this week's selloff was halted by news that opposition DPJ is going to vote down Iwata's appointment as deputy BoJ governor. The uncertainties over Iwata triggered some market jitters. It should be noted that DPJ has already voiced support for both Kuroda and Nakaso, so their appointment should only be a necessary formality. Even without Iwata, Kuroda will still pursue aggressive easing measures to bring Japan out of deflation.

Even without the support of DPJ, Iwata's approval could happen. The ruling LDP already has majority in the lower house. In the 242 seat upper house, LDP have already got 102 seats, just 16 short of majority. The Your party has 11 seats while other minority parties and independents hold 53 seats. That is more than enough for LDP to get the 16 votes needed. Decisions are expected today from The Your, Japan Restoration and the New Renaissance Parties. We expect yen's selloff to resume sooner or later after the picture is cleared.

The australian dollar is performing well against other major currencies this week. The GBP/AUD pair dropped to another record low of 1.4380 yesterday, while the AUD/JPY jumped to 4 year high of 99.56. However, Aussie is losingsome momentum today, as data showed home loans unexpectedly fell -1.5% in January. Economists noted that it's the fourth straight months of decline in home loan approvals, and could raise the chance for more RBA rate cuts. However, it's also argued that the full impact last year's four rate cuts hasn't been reflected in the markets yet. And RBA will continue to wait for the cuts to be passed on to consumers before acting.

Elsewhere, markets are pretty directionless. The sterling dipped yesterday on weak production data but recovered in the Asian session. The euro is still struggling around 1.3 against the dollar for now. US retail sales will be the main focus of the day. Dollar and stocks were strong recently, and have positive responses to solid economic data from US. The DOW edged to a new record high of 14450 yesterday, but S&P 500 and Nasdaq failed to follow and ended the day lower. More positive data are needed to sustain the rally in equities, as well as in the greenback. Retail sales are expected to rise 0.5% in February with ex-auto sales up 0.5%. The US will be releasing import price index and business inventories.