FTSE - Bank Holiday
DAX +2 points at 11452
CAC -2 points at 4838
Eurostoxx -2 points at 3271
Asian traders showed a little preference for the USD, yet thin holiday volumes were in play at the early hours of the trading week.
In Japan, the inflation excluding fresh food decelerated by 0.4% on year to November, versus -0.3% year-on-year expected. The core inflation retreated to 0.1% year-on-year, from 0.2% a month earlier. Prices in Tokyo dropped the most since February 2013. The appetite in yen remained limited as Japan’s Chief Cabinet Secretary Suga reiterated the importance of the foreign exchange policy for Prime Minister Abe.
Japan’s fight against deflation is not over. Although consumer prices are expected to pick up due to a recent rebound in oil and commodity prices, the Bank of Japan (BoJ)’s 2% inflation target remains a sizeable challenge.
The USD/JPY remained soft amid the soft inflation data revived the BoJ doves. The pair traded in between 117.07/117.46 in Tokyo. There are solid buyers sub-117.00. The key short-term support stands at 116.55 (major 38.2% retracement on Dec 8th to Dec 15th rise), for an extension of the actual bullish formation toward the 120.00 handle.
Appetite in the Canadian dollar and the Antipodeans (AUD, NZD) remains limited due to a lack of carry inflows. The AUD/USD is a touch higher than 0.7145 (Max’16 low), if broken, could encourage more sellers to jump in for a further slide toward the 0.70 handle.
The euro remained offered in Asia, while the Eurostoxx futures (+0.21%) were slightly in demand. There could be a better risk appetite amid Deutsche Bank (DE:DBKGn) agreed to pay $7.2 billion, versus $14 billion mentioned by the US Department of Justice in September. Although the deal does not cover for other litigates including price fixing in the foreign exchange and metals markets, interbank rates manipulation and billions of dollars worth of funds driven out of Russia, last week’s settlement has been a good short-term relief for investors, given that Deutsche Bank needn’t raise capital to cover for legal charges in the immediate future.
In Italy, rescue of banks begins after the Italian government approved €20 billion aid package.
FTSE is closed due to bank holiday. The Eurostoxx and the DAX are called 2 points higher at the open, at 1452 and 3271 respectively.