Yen weakens broadly as the week starts as risk appetite continues to drive the financial markets. Asian equities opened broadly higher on news that Iran has agreed to limit its nuclear program. The USD/JPY rose to as high as 101.80 so far today and breached 101.53 resistance. The pair is now in an important near term resistance zone between 101.53/103.73, and we'd start to be cautious on reversal. The EUR/JPY also followed and rose to as high as 137.34 so far while the GBP/JPY jumps to 165.17. Elsewhere, the dollar remains soft against European majors. The greenback is attempting to recover, but buying momentum is minimal. The Aussie and Canadian are stuck in tight range against the dollar too.
Iran has agreed to limit its nuclear program in exchange for relief from sanctions on oil, auto parts and precious metals. This is seen as an important step to end the three decade diplomatic gridlock between Iran and the West. The details of the deal could be found here. In short, the deal would prevent Iran from creation of nuclear weapons while retaining the right to enrich uranium for fuel purpose. US president Obama said the agreement would have "key parts" of Iran's nuclear program "rolled back", and there are "substantial limitations" to help prevent Iran from building a nuclear weapon. And, he said that, "opened up a new path toward a world that is more secure".
The latest CFTC data showed a sharp jump in yen net shorts on November 19 comparing to the prior week. Euro net longs dropped for the forth straight week to 8.9k, down from 16.8k and compared to the 2013 high of 72.4k made back in October. Yen net short jumped sharply to -112.2k, from -95.1k, hitting new 2013 high. Sterling net short dropped back to -1.7k, from -9.3k. The Canadian dollar net short was relatively unchanged at -16.3k. Aussie net short was relatively unchanged at -35.8k.
Looking ahead, the economic calendar is light today with UK BBA mortgage approvals and US pending home sales featured only. US will have thanksgiving holiday on November 28, and some data release was pushed ahead to Wednesday. Key events to watch this week include:
- Monday: US pending home sales
- Tuesday: BoJ minutes; US new residential construction, house prices, consumer confidence
- Wednesday: New Zealand trade balance; German Gfk consumer sentiment; UK GDP revision; US durables, jobless claims; Chicago PMI
- Thursday: German CPI, unemployment, Eurozone M3; BoE financial stability report; Canada RMPI, IPPI
- Friday: Japan manufacturing PMI,, CPI, unemployment, industrial production; UK Gfk consumer sentiment; Swiss KOF; Eurozone CPI; Canada GDP