JPY crosses face an interesting test right here at the end of the Japanese financial year as US and European markets are close while Japan releases a blitz of economic data tonight and Tankan survey Monday.
Asia had a weak session in equities despite a fairly strong session for the US today, and this weighed a bit on the Aussie and kept the JPY toward the stronger side of its recent range in many crosses. Developments were fairly few and far between on the ground. Some of the weakness in China may stem from new rules aimed at reining in some of the excesses of so-called WMP’s or wealth management products, which are vehicles guaranteeing investors higher returns, but are rather opaque in terms of where the money ends up being invested, and concerns have been rife that some of these schemes are outright Ponzi setups. The extraordinary weakness in BHP Billiton equity suggests investors are rapidly souring on the mining industry’s prospects in Australia, and although the correlations haven’t been there for mining equities and the Aussie lately, this most certainly “means something” for the Aussie.
Cyprus has agreed on a deal to allow cash withdrawals up to EUR 300 as banks will reopen in Cyprus today after with strict restrictions and now that the ECB has had the opportunity to send lorries stuffed with bricks of cash to Cyprus. A series of other restrictions on payments has also been agreed to prevent bank runs there. For biting commentary on the Cyprus solution, see Ambrose Evans-Pritchard’s latest over at the Telegraph: Cyprus has finally killed the myth that EMU is benign.
Looking ahead
Look out for Canadian GDP data later – this 1.0150-1.0100 area is the final hope for the USDCAD bulls looking for the recent rally to mean something in the bigger picture. The enormous recent WTI crude rally from 92 to above 96 has also come to the CAD’s aid here.
We’ve also got the US weekly jobless claims, latest GDP revisions and Chicago PMI up later and a whole raft of Japanese data up overnight (Jobless Rate, Manufacturing PMI, CPI, Industrial Spending, Household Spending).
This is a long Easter weekend, with the US and Europe out of commission tomorrow and most of Europe out for Monday as well (including London). This could mean fairly strong fixing flows and odd behavior into the early part of the US session as operations close up shop for the quarter, but I suspect some of the activity over the last couple of days has been due to the same phenomenon.
There is a chance someone senses the opportunity to touch off a round of stops in the direction against recent trends – here I’m thinking mostly of JPY cross downside as offering the most risk for big moves over the next 36 hours. The huge data calendar overnight for Japan and then the Tankan on Monday as well as Chinese PMI data offers plenty of event risk potential in a very thin market.
Recall that next week is a very busy one with the RBA on Tuesday, the ECB, BoE and BoJ all on tap on Thursday as well as the US ISM reports on Monday and Wednesday and the US employment report Friday so keep plenty of powder dry for next week and save some of your trading energy up over this long weekend and be wary of complacency in case things do heat up overnight.
In other words, stay careful out there, as always.
Economic Data Highlights
- New Zealand Feb. Building Permits out at +1.9% MoM vs. +3.0% expected
- Japan Feb. Retail Trade out at +1.6% MoM and -2.3% YoY vs. +0.5%/-1.8% expected, respectively and vs. -1.1% YoY in Jan.
- UK Mar. GfK Consumer Confidence survey out at -26 vs. -27 expected and -26 in Feb.
- UK Mar. Nationwide House Prices out at +0.0% vs. +0.2% expected and +0.2% in Feb.
- Germany Feb. Retail Sales out at -2.2% YoY vs. +1.2% expected and +2.5% in Jan.
- Germany Mar. Unemployment Change/Rate (0855)
- UK Jan. Index of Services (0930)
- Canada Jan. GDP (1230)
- US Q4 GDP Revision (1230)
- US Weekly Initial Jobless Claims (1230)
- US Mar. NAPM Milwaukee (1300)
- Euro Zone Bank of France’s Noyer to Present Annual Accounts (1330)
- US Mar. Chicago PMI (1345)
- US Weekly Bloomberg Consumer Comfort Index (1345)
- US Mar. Kansas City Fed Manufacturing Activity (1500)
- Japan Mar. Markit/JMMA Manufacturing PMI (2315)
- Japan Feb. Jobless Rate (2350)
- Japan Feb. National CPI (2330)
- Japan Feb. Industrial Production (2350)
- Japan Feb. Housing Starts (0500)