Yen Opens Lower After Olympic Win

The yen drops broadly while Nikkei jumps as much as 280 pts in initial trading in reaction to Japan's win to host the 2020 Olympic. The prime minister Abe said that hosting the Olympics and Paralympics will have "good effects on a wide range of areas such as infrastructure and tourism". The games are expected to give an additional 0.3% to the GDP for the Japanese economy according to the government. But some analysts noted that the impact should be larger, and would add around 0.7% to 0.8% of GDP similar to UK. Data released in Japan saw Q2 GDP revised higher and finalized at 0.9% qoq but missed expectation of 1.0%. GDP price index was revised lower to -0.5% y/y.

Asian equities are also limited by data showing rebound in Chinese trade. Trade surplus widened to $28.5 billion in August, the highest level since January. Exports rose an impressive 7.2% y/y, and accelerated from July's 5.1% growth. Meanwhile, import growth slowed to 7.0% y/y, down from July's 10.9% y/y. The set of data was seen as stronger than expected by economist and suggested recovery in trade activities. Also released from China, the CPI slowed to 2.6% y/y in August while PPI improved to -1.6% y/y. Nonetheless, note that A chief economist at the State Information Center said over the weekend that China may revise growth target down to 7% in 2014, down from this year's target of 7.5%.

The Aussie is firm in tight range against dollar after Tony Abbott, leader of the Liberal-National coalition, won the election to be the next prime minister over the weekend. Abbott pledged that the "incoming government will be getting down to business" and he pledged to repeal the 30% tax on mining sector and dismantle the carbon pricing mechanism. To win the election, Abbot also promised to cut business tax rates and made Australia "more open for business". Released from Australia, home loans rose 2.4% in July.

Soon to come; Japan consumer confidence, Swiss unemployment and retail sales, Eurozone Sentix investor confidence, and Canada building permits.

Latest CFTC data showed that on September 3, the euro net position deteriorated with the Canadian dollar comparing with the prior week. Positions were relatively steady elsewhere. Euro net lows dropped sharply to 22.7k, down from 40.1k. The yen net short was relatively unchanged at -79.8k. The Sterling net short rose slightly to -43.0k, but stayed in range, while the Australia dollar net short was steady at -71.5k. Meanwhile, the Canadian dollar net short rose for the second week to -34.6k, from -25.0k.