Yen opened the week mildly higher as Asian equities slipped but gains were limited. Sentiments stabilized into European session as major indices are mixed, recovering some of last week's loss. Commodity currencies, though, are mildly higher as lifted by news from China. In order to stimulate the economy, the People's Bank of China (PBoC), effective on April 20, lowered the RRR by -100 bps for all the banks, and an additional -100 bps for some rural financial institutions and -200 bps for the Agricultural Development Bank of China. The RRR for rural cooperative banks will also be lowered to rural credit cooperatives' level. A cut RRR has been widely expected but the magnitude is the biggest since end 2008. The cut this time should inject around RMB 1.3 trillion of liquidity into the financial system. Indeed, the latest series of data reaffirms that the growth momentum in China has deteriorated.
In Eurozone, uncertainty of Greece's bailout appeared to have increased. Several officials indicated that their expectations are low for the Eurogroup meeting on April 24. Last week, German finance minister Schauble noted that "nobody expects that there will be a solution" at the upcoming Eurogroup meeting. EC spokesman Margaritis Schinas also indicated that the EC was "not satisfied with the level of progress in talks" and called for work to "intensify". As a result, expectations have been heightened for an agreement to be reached on the May 11 meeting. Yet, the postponement would delay Greece's receipt of the another 7.2B tranche before the beginning of May for repayment to the IMF of 200M euro interest on May 1 and approximately 780M euro of capital on May 12. In this regards, IMF's managing director Christine Lagarde has already rejected the idea of the delay in payment as "payment delays have not been granted by the board of the IMF in 30 years".
On the data front, New Zealand CPI dropped -0.3% qoq, rose 0.1% yoy in Q1, versus expectation of -0.2% qoq, 0.2% yoy. UK Right move house price rose 1.6% mom in April. Japan tertiary industry index rose 0.3% mom in February. German PPI rose 0.1% mom, dropped -1.7% yoy in March. For the week ahead, the RBA minutes and BoE minutes would be due on Tuesday and Wednesday, respectively. The latter would be more closely watched as the central bank, as usual, did not release a policy statement following the April meeting. We expect the members voted unanimously to keep the policy rate and the asset purchase program unchanged. On the dataflow, Australia would release its 1Q15 inflation report on Wednesday. Headline CPI probably eased to +1.3% y/y from +1.7% in 4Q14. Core CPI might have stayed unchanged at +2.2% y/y. A number of preliminary manufacturing PMI from Eurozone would be also due Thursday.