oday looks to be another active day for Japanese stocks and JPY pairs that could create a number of trading opportunities. Yesterday’s 5%+ drop in the Nikkei did not follow through to other regions where stocks rebounded moderately. US indices
did not regain all of the previous days losses and faded into the afternoon suggesting that consolidation may continue for some time.
With the weekend looming a big battle appears to be brewing between those who want to escape the volatility in the Nikkei and go to the sidelines for the weekend and those looking to cover shorts or go bargain hunting. Adding to the mix is that today is the biggest day of the month for Japanese economic data which could spark significant moves as traders try to determine if all the new monetary stimulus has started to boost the economy or if additional measures may be needed.
In addition to the economic numbers, reports of coming changes to Japanese FX margin and trading rules may impact action in JPY pairs.
USD weakened through the day as speculation that the Fed may be about to start cutting back QE eased in the face of mixed economic numbers that saw GDP and jobless claims come in below expectations. Although European currencies led the league table on the day, AUD And NZD were able to regain their footing. On a rebound, AUD could outperform as a big move up by the Kiwi could invite additional RBNZ intervention.
Being the last day of the month, we could see additional action from traders looking to square positions before the end of the month which could drive some profit taking or short covering depending on the market. Depending on how Japan goes, we may also see some positioning ahead of the big manufacturing PMI reports due over the weekend and through Monday.
Highlights of overnight announcements include:
Brazil interest rate decision 50 bps increase to 8.00% a 25 bps increase had been widely expected.
US GDP 2.4% vs street 2.5%
US jobless claims 354K vs street 340K
US core PCE inflation 1.3% vs street 1.2%
US pending home sales 13.9% vs street 12.8%
US natural gas storage 88 BCF vs street 86 BCF
US crude oil storage 3.0 mmbbls vs street (0.5 mmbbls)
US gasoline storage (1.5 mmbbls) vs street (0.5 mmbbls)
Canada industrial prices (0.8%) vs street (0.3%)
Canada raw mat prices (2.2%) vs street (0.7%)
France change in jobseekers 39.8K vs street 30.0K
Swiss GDP 1.1% vs street 0.9%
Spain GDP (2.0%) vs street (2.0%)
Upcoming significant announcements include:
9:15 am AEST Japan PMI previous 51.1
9:30am AEST Japan household spending street 3.0%
9:30 am AEST Japan unemployment rate street 4.1%
9:30 am AEST Japan consumer prices street (0.7%)
9:50 am AEST Japan industrial production street (3.4%)
2:00 pm AEST Japan vehicle production previous (16.4%)
3:00 pm AEST Japan housing starts street 4 1%
3:30 pm AEST India GDP street 4.8%
7:00 am BST Germany retail sales street 1.1%
7:45 am BST France consumer spending street 0.0%
9:00 am BST Italy
unemployment rate street 11.6%
9:30 am BST UK net consumer credit street £0.4B
9:30 am BST UK mortgage approvals street 54.6K
10:00 am BST Eurozone unemployment rate street 12.2%
10:00 am BST Eurozone consumer prices street 1.4%
8:30 am EDT Canada Q1 GDP street 2.3%
8:30 am EDT Canada monthly GDP street 1.5%
8:30 am EDT US personal income street 0.1%
8:30 am EDT US personal spending street 0.0%
8:30 am EDT US PCE core inflation street 1.0%
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