Markets Steady As IMF Hits BRICS Funding Roadblock: April 22, 2012

Markets were rather steady in Asia on Friday. Dollar and yen were soft but there was no clear selling momentum. The European debt crisis is a key topic in G20 meeting in Washington. Meanwhile a major focus is whether IMF chief Lagarde is able to meet her target of raising another $400b to boost the global firewall that help stem eurozone debt crisis.

Japan's Finance Minister Azumi said in a footage today that IMF is able to achieve this target. So far, Lagarde has secured $320b from Europe and Japan and she'd rely on BRICS countries to fill up the gap. But it's made clear that BRICS countries are requiring additional power at the IMF before making the contribution.

After a meeting between BRICS, Brazilian finance minister Guido Mantega said that they're not ready to set a figure for the contribution yet as "there are preconditions that have not been fulfilled by the countries - whether they will comply with the agenda of reforms." And he criticized that some countries are "much more enthusiastic about asking for money rather than moving forward with the quota reform." China is so far quiet on the issue even though a Foreign Ministry spokesman said that it's "willing to discuss various funding plans for the IMF with IMF members, in a frank and positive manner."

On Friday, three important economic data should have been watched. German IFO business climate is expected to dropped slightly to 109.5 in April. ZEW posted a strong upside surprise earlier this week and a solid IFO number will likely give some boost to sentiments.

UK retail sales is expected to show 0.5% growth mom in March. Sterling has been the stronger currency tis week as BoE minutes showed much less chance of additional easing. A strong number will could life GBP/USD further away from 1.6 handle. Canadian CPI will also be watched closely and is expected to moderate to 2.1% yoy in March. Canadian dollar was also strong this week after BoC surprisingly turned hawkish and opened the door for tightening. However, USD/CAD failed to break through the recent low of 0.9841 and rebounded as the week goes.