The US $ has under-performed in the O/N trading session. Currently it is down against 13 of the 16 most actively traded currencies, in a �subdued� trading session. Today is Martin Luther King Day and a Financial Holiday in the US. Expect the currency market to remain �tepid� until tomorrow. This week we have the BOJ rate decision announcement (a two day meeting 17th and 18th of Jan.). The recent JPY movements (120.53) have traders speculating that �no rate� increase is warranted (0.25%). Remember, the BOE was capable of surprising us.
The US $ currently is trading lower against the EUR +0.17%, GBP +0.32%, CHF -0.15% and stronger against JPY +0.11%. The commodity currencies are higher with AUD +0.19% and CAD -0.14%. The �loonie� continues to trade under pressure, hitting a 13 month low last week, as commodity prices have started the year on the �soft� side. With the Canadian Economy failing to show signs of growth over the last few months, traders are willing to sell CAD on any US $ pull back and see 1.2000 as a short term target.
Crude is higher ($53.56 up 55c), as Algeria has backed further cuts in production by OPEC (ideally to stem the recent fall in oil prices). It is anticipated that the announced Feb. cuts will be brought forward. Winter storms up the east coast of North America will further support oil. Gold eases ($626) O/N after appreciating 2.6% on Friday as investment demand increased because of accelerating global inflation. Some investors took profit this morning as they feared that last weeks move was over extended. With thin illiquid markets today, one will experience further potential price exaggeration.
The Nikkei closed at 17,210 up +152. The DAX index in Europe was up +21 points at 6,726; the FTSE (UK) currently is 6,22o, -66 points. The US markets are closed today. Yields of the US 10-year note �backed up� 3bps on Friday (4.77%), as the US core retail sales number indicated no short term easing will be seen from the FED.
Euro-land industrial production excluding construction rose 0.2% in Nov. after falling 0.1% in Oct., this morning. The increase was below economists expectations of a 0.7% rise. The EUR is little changed (1.2946) as the market waits for the investor confidence numbers tomorrow.
JPY had gained earlier this morning against the US $ after a report showed accelerating growth in machinery orders (3.8% vs. 3.5%), strengthening the BOJ�s case for hiking interest rates this week (0.25%). But, lawmakers will continue to pressurize the Central Bank to support the economy thus adding further pressure to �Yen�. Traders anticipate JPY to hit 122.75 in the short term.
This morning, Sterling rose to its highest against the EUR (65.83) since Aug. 2004 after a report showed factory prices rose for the first time in four months in Dec., strengthening the case for further interest-rate increases (5.25%). The Producer Output Prices rose 0.2% after a flat reading in Nov. Traders wait for the CPI out tomorrow, which should provide further support for �the pound� (1.9654).
All Day USD Holiday: Martin Luther King Day
8:30 am CAD New Motor Vehicle Sales m/m 2.8% vs. -1.6%
6:50 pm JPY CGPI m/m 0.0% vs. -0.1%
6:50pm JPY Import Price Index m/m -2.2%
7:01pm GBP RICS House Price Balance