Forex Blog

April 13, 2012

BoJ has to work to weaken JPY

Filed under: OANDA News — Tags: , , , , , , , , , , — admin @ 11:03 am

There was a ‘small’ percentage of a chance that the BoJ was to continue along the easing path earlier this week after last month’s surprise announcement. However, Governor Shirakawa refrained from expanding monetary easing to counter deflation, resisting pressure from his fellow politicians who only days ago rejected a nominee for the policy board. The BoJ kept the key interest rate between zero and +0.1% and left its +JPY30t asset-purchase fund and +JPY35t credit-lending program unchanged. Post announcement has seen fresh JPY cross weakness, especially against the EUR. The Governor has promised that the BoJ will conduct a particularly careful examination at their next meeting. The market is interpreting this as suggesting a high probability that the BoJ will implement some sort of easing measures when it announces its Outlook report on 27 April.

Below are some other highlights of the week:


Asia

  • CNY: China’s CPI inflation rose to +3.6%, y/y, in March from +3.2% in February, higher than the consensus forecast for +3.4%. However, inflation has stayed subdued, remaining below the psychological +4% for the second successive month. Analysts expect it to remain on the tepid side for the next six months. A small percentage of the market expects a -50bp cut in commercial banks’ reserve requirement ratio (RRR) later this month.
  • JPY: Japan’s current account balance returned to a surplus of +JPY854b in February. Market had been expecting a +JPY650b (sa) surplus. Being back in surplus, perhaps Governor Shirakawa needs to be more aggressive with the BoJ’s easing policy to weaken the yen? A tough ask in this risk aversion environment.
  • TWD: Taiwan’s exports fell -3.2%, y/y, in March, less than estimate (-4.5%). However, on a sequential seasonally adjusted basis, exports fell -10%, m/m, in March. Is this an emerging FX trend? The lack of signs of a more significant recovery in Asia exports is likely to weigh on Asia FX.
  • JPY: BoJ Governor Shirakawa refrained from expanding monetary easing to counter deflation, resisting pressure from his fellow politicians who last week rejected a nominee for the policy board. The BoJ have kept the key interest rate between zero and +0.1% and left its +JPY30t asset-purchase fund and +JPY35t credit-lending program unchanged.
  • CNY: China reported an unexpected trade surplus last month as import growth trailed forecasts, emphasizing the risks of a deeper slowdown in the world’s second-largest economy. Inbound shipments rose +5.3%, well below the +9% estimated. Exports increased +8.9% from a year earlier, providing us with a trade surplus of +$5.35b, compared with a projection for a -$3.15b trade deficit.
  • AUD: Aussie business confidence improved last month as the NAB business confidence index rose +2 points to reach +3 in March. Other data revealed that ANZ job advertisements increased +1%, m/m, in March to reach the highest level in nearly four-years, compared with a +3.3% rise in February.
  • Asia: Mid-week, risk appetite tried to make a timid comeback after a stronger than expected opening to the Q1 earnings season in the US, “interrupting a multi-day sell off across asset classes.”
  • JPY: Japan’s bank lending rose +0.8%, y/y, in March, a fifth consecutive increase following a +0.6% rise in February. Machinery orders surprised strong, up +4.8% in February after rising +3.4% in January.
  • AUD: The Aussie Westpac consumer confidence index fell -1.6% in April to 94.5 from 96.1 in March (its lowest level in eight-months). Home loans were down -2.5%, m/m, in February, compared with a revised -1.1% fall in January.
  • NZD: The New Zealand Institute of Economic Research business opinion indicator rose to 13 in Q1 from 0 in Q4 last year.
  • INR: The Reserve Bank of India this week reiterated its concerns on inflation and a widening current account deficit in a meeting with economists a week before its annual monetary policy review.
  • AUD: Aussie payrolls rose by +44k in March, more than the consensus forecast for +6.5k. The details were strong with both full and part-time employment rising on the month. The unemployment rate was unchanged at +5.2% after a +0.2 point rise in the participation rate to +65.4% and hours worked rose 9.5m. AUD yields rose in response to reduced pricing for RBA rate cuts. Do not be surprised that the RBA “is likely to err on the side of caution and cut rates -25bp at its May meeting”; and this despite the consumer inflation expectation rising to +3.3% in April from +2.7% in March.
  • CNY: China’s new loans rose a larger than expected +CNY1.01t vs. the consensus forecast for +CNY800b. Premier Wen and PBoC Governor Zhou have both been promoting lending, especially to SME’s in recent weeks.
  • NZD: Kiwi credit card spending fell by -0.2%, m/m, in March from a fall of -0.3% in February.
  • JPY: Japan’s Domestic Corporate Goods Price Index rose +0.6%, m/m, in March, up from a rise of +0.2% in the prior month. Growth in money supply, M2 and M3, has accelerated to +3.0% and +2.6% in March.
  • KRW: South Korea’s jobless rate fell to +3.7% in March from +4.2% in February. The fall was driven by a rise in service sector jobs.
  • CNY: Chinese data showed GDP growth slowing to +8.1% in Q1 from +8.9% in Q4 and below consensus expectations of +8.5%. It was the slowest pace of growth recorded in three-years. Add this report to some of the other regional poor numbers recorded this year and it seems the market will have to postponing or push out China’s bottoming out process beyond this summer. Again, the market will be raising the question of ‘hard or soft’ landing for the world’s second largest economy?
  • BoJ: Governor Shirakawa has vowed to pursue ‘powerful easing’ to overcome deflation.
  • SGD: The Monetary Authority of Singapore (MAS) surprised on the hawkish side on Friday, increasing the slope of the appreciation path and narrowing the policy bands of the SGD NEER. Analysts guesstimate that the new pace of appreciation is likely to be +2-3% per annum versus about +1-2% previously.
  • SGD: GDP rose an annualized +9.9%, q/q, in Q1, well above the market consensus for +6.8%. Activity was boosted by a near +15% rise in manufacturing production, while construction output jumped a whopping +25%.
  • KWR: The BoK kept the policy rate unchanged at +3.25% as widely expected. The statement acknowledged signs of moderate recovery in domestic economic growth and re-affirmed the central bank’s stance to bring down inflation expectations.

Dollar Suffers Biggest Hit Since in Seven Weeks as Risk Perks Up

Filed under: Forex News — Tags: , , , , , , , , , , — admin @ 7:46 am

By John Kicklighter, Currency Strategist for DailyFX.com

  • Dollar Suffers Biggest Hit Since in Seven Weeks as Risk Perks Up
  • Australian Dollar Rallies after Employment Boost, Awaits Chinese GDP
  • Japanese Yen Volatility Belongs to Carry, Trend to BoJ Stimulus Pressure
  • Euro: With Global Sentiment Steadying, EU Crisis Fears Subside
  • British Pound Strength Should be Monitored Through EURGBP
  • Swiss Franc: SNB has a Distinct Interest in Risk Trends, Global Stimulus
  • Gold Gains Serious Traction Against Dollar, Struggles Against Aussie Dollar

April 8, 2012

What is the BoJ to do?

Filed under: OANDA News — Tags: , , , , , , , , , , , , , , — admin @ 5:58 am

Asian FX remains hostage to the “big dollars” continuing attempt to turn stronger on the one hand and continuing resistance to currency appreciation from Asian central banks on the other. Next week is starting to feel like a big week for the BoJ. It seems that rising political pressure from the diet could be putting Governor Shirakawa and company on the back foot. It seems that politics is arguing for a compromise with parliament by easing further at its 9-10 April policy meetings. This would be an obvious surprise to the market. However, if they do, it would probably occur as a further increase in its asset purchase program.

Below are some other highlights of the week:


ASIA

  • CNY: A surprise jump in the Chinese PMI last weekend has helped the risk complex start the week off on a sound footing (53.1 vs. 51). This release was in stark contrast to the HSBC PMI. Many now believe that the seasonality in the official series has diminished over the past year or so and that the print should be seen as simply a good PMI number. This release probably will not require the PBoC to be thinking about launching any meaningful stimulus any time soon. Equity markets posted small gains in Asia, although China’s markets were closed through Wednesday for a holiday.
  • JPY: Now that Japanese exports have finished with buying their domestic currency for financial year end certainly has opened the topside for the currency pair outright. The weaker than expected Tankan survey over the weekend (-4 vs.-1 for Q1) is however going to raise expectations for more BoJ easing at next week’s meeting. The immediate problem with the short yen trade is that everyone has it on.
  • AUD: Aussie AiG performance of manufacturing index fell 1.8 points to 49.5 in March.
  • KRW: Korea exports were weaker than expected, down 1.4%, y/y, while imports fell -1.2% in March. The trade surplus increased to $2.3b from a revised $1.5b in February.
  • KRW: Korea’s credit rating outlook was raised by Moody’s Investors Service to positive from stable on the nation’s fiscal strength and improved resilience to financial market turmoil.
  • CNY: Another strong Chinese non-manufacturing PMI report has been supporting risk-sensitive currencies and undermining the USD for the most part of the week. It rose to 58.0 in March from an upwardly adjusted 57.3 in February. Even with the seasonal adjustments, the current level of the PMI is historically knocking at the high end of its range. Another factor bullish for risk, despite the Euro-zones periphery concerns.
  • CBank: By mid-week there still has be no noticeable Asian central bank intervention in support of the USD.
  • AUD: The RBA kept the cash policy rate on hold at +4.25%, and it was no surprise that they also sounded dovish. Governor Stevens and his policy makers judged that it would be prudent to wait for the inflation data before easing. The policy statement said that, “If demand conditions were to weaken materially, the inflation outlook would provide scope for easier monetary policy.” The futures market continues to price in a 75bp ease by year end, a factor that was going to continue to weigh on the currency no matter what. For now, implied short term yields on down along the curve as dealers price in a May easing bias.
  • AUD: Aussie retail sales advanced +0.2%, m/m, in February, in line with the consensus forecast, slowing from a +0.3% rise in January.
  • JPY: Japan’s labour cash earnings rose +0.7%, y/y, in February after falling -0.9% in the prior month. The monetary base fell -0.2%, y/y, in March following a +11.3% rise in February, and this despite the introduction of new-asset purchase measures.
  • AUD: Aussie trade balance disappointed for the second consecutive month, reporting a deficit -AUD0.5b in February vs. the consensus forecast for a +AUD1.1b trade surplus. The January trade deficit was also revised higher to -AUD0.9b from -AUD0.7b previously. The weaker-than-expected data contributed to AUD weakness, on the coattails of the FOMC-driven USD rally and compounding recent fears of Chinese slowdown, helping push the Aussie through the psychological 1.03 level.
  • CNY: China announced that it will raise the total quota for its qualified foreign institutional investor scheme (QFII), by $50b to $80n.
  • CNY: Chinese Premier Wen Jiabao said that the government needs to allow more private capital participation in China’s financial markets in an effort to break the “monopoly” of the state-owned banks.
  • PHP: In the Philippines, CPI inflation fell to +2.6%, y/y last month from+2.7%. With global energy prices remaining elevated, do not expect the BSP to ease policy any time soon.
  • NZD: The Kiwi ANZ Commodity Price Index fell -1.7%, m/m, in March after being unchanged in February.
  • CNY: The HSBC Services PMI fell slightly to 53.3 in March from 53.9 in February. This is again opposite to the rise in the official non-manufacturing PMI to 58 in March from 57.3 in February.
  • IDR: It was reported that Indonesia will impose a +25% export tax on coal and base metals this year, which would be increased to +50% in 2013. Obviously this will hurt exports. This may lead to a further deterioration of the current account balance and it should be negative for IDR.

April 3, 2012

EUR Bears Incremental Fears

Filed under: OANDA News — Tags: , , , , , , , , , , — admin @ 4:20 am

This is day three of a new quarter and the EUR price action is already boring. The forex asset class is being left behind by both equities and fixed income in excitement. Bond dealers are beginning to believe that the worst may be over for US treasuries. Perhaps the debt market can now be priced using fundamentals? While equities have investors with their new risk profiles revisiting 2007 index levels. When can we join in the fun? The market is trying to turn investors attention to the prospect that rally on risk can continue into Q2. It’s the contrarian who believes we are still in need of real correction to gauge the sustainability of the rally, rather than these contained flat-lining incremental EUR ranges.

The EUR bears nightmare is that a real correction might not arrive until risk markets have rallied further. A realization that the global growth outlook is not that healthy, coupled with elevated energy prices could help to promote a correction in this “bull market.” In this scenario we would hear more about QE from the Fed and perhaps further manipulation of crude’s strategic reserves. Maybe it is time for the bears to begin shifting their fears from a “no” correction to one where risk markets will continue to rally “without” a correction. It seem either scenario will lead to a messy squeeze.

For now we live off the global PMI scraps, central bank rhetoric and Euro periphery comments. The suspense of the RBA announcement earlier this morning was not worth it. They kept the cash policy rate on hold at +4.25%, and it was no surprise that they also sounded dovish, allowing the AUD to remain on the back foot. Governor Stevens and his policy makers judged that it would be prudent to wait for the inflation data before easing. The policy statement said that, “If demand conditions were to weaken materially, the inflation outlook would provide scope for easier monetary policy.” The futures market continues to price in a 75bp ease by year end, a factor that was going to continue to weigh on the currency no matter what.

Equity markets, to this point, have had a very strong start to Q2, largely on better than expected UK, US and Chinese PMI data. Last nights Chinese non-manufacturing sectors release was no different. It rose to 58.0 in March from an upwardly adjusted 57.3 in February. Even with the seasonal adjustments, the current level of the PMI is historically knocking at the high end of its range. Another factor bullish for risk, despite the Euro-zones periphery concerns. Spanish worries will continue to try and act like a dead weight no matter what positive economic data is being thrown at investors this morning.

With the global economic calendar being rather quiet today, market focus will probably fixate on the FOMC’s minutes this afternoon. The most recent statement featured an acknowledgement of improved labor market data and of higher energy prices. However, many believe that the minutes might provide details on the pros and cons of easing policy options. Maybe a mention of operation twist, sterilized and/or unsterilized security buying? However, none of this is a perquisite to rebuild QE expectations.

Forex heatmap

Other Links:
Firewall Top-Up Signals Eurozone Expects Crisis to Worsen

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March 26, 2012

A EUR Range Play?

Filed under: OANDA News — Tags: , , , , , , , , , , , , , , — admin @ 4:41 am

It seems market participants are grappling between the desire to pick up some bargains following last weeks heavy equity declines and concerns about global economic growth. Despite some better news over the weekend that Germany does not intend to step in the way of the EFSF and EMS bailout funds to be combined to boost the regions firewall facility, it was Monti’s comments about Spanish concerns that could reignite Europe’s debt crisis has the EUR trading on the back foot after surprisingly stronger German data this morning.

German ifo index for March came in better than expected at 109.8. It was the fifth consecutive increase, and on the face of it, points to a modest increase in activity. However, “The near term risks remain skewed to the downside as oil prices might weigh on business profits and external demand remains sluggish, especially from other main euro-zone countries that suffer from a technical recession.” The markets initial reaction was to see a jump in EUR outright to just short of Asian overnight highs (1.3285). It was here that fresh intraday shorts took advantage of the spike.

Again, the market has lacked the impetus to breach the 1.33 option barrier trigger point. The unwillingness of many to make any more bold moves after last weeks disappointing US Industrial production numbers and Chinese and Euro-zone PMI’s has allowed Middle Eastern names to push the the single unit to test its daily low just below 1.32. Many this morning have been playing the range, pulling bids back, joining the stop-losses close to these levels while others have been gradually taking back their quick post ifo profit. The technical analysts will tell you that true support comes in around 1.3170 (10-day moving average), a region where there is sure to be stops below. Option expiries on the topside at 1.3250 will again bring in some Middle eastern selling names.

Markets focus by week’s end will be twofold. Ahead of the Euro group meeting, Germany is reportedly ready to allow a temporary increase in the overall euro-zone bailout fund. The compromise would allow the already existing commitments of the EFSF to run in parallel with the full lending capacity of the prospective ESM, boosting overall size available to about +€700b. If this plays out accordingly, the market can expect some relief. Last week’s flash estimate of Chinese manufacturing PMI suggests that the official PMI (at the end of the week) will likely fall in March. However, with the Chinese New Year holidays being in February for four out of the past five years, historically the official PMI tends to rise by +2.9 points in March from February. A result above 50 and the market should expect some Asian currency relief. So far, the market has only the enthusiasm to play the range.

Forex heatmap

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Quarter-end pushes USD repricing

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March 15, 2012

USD on a One Month High as Fed Tweets

Filed under: OANDA News — Tags: , , , , , , , — admin @ 4:18 am

The main takeaway from yesterday’s market was the strengthening of the U.S. dollar most notably against the Japanese Yen and the Euro as the result of the positive economic indicators to come out of the United States and the Federal Reserve comments on QE which have increased U.S. Treasury Yields.

fxlabs currency heapmap

The biggest story on Wall Street was published on the New York Times Op-ed section. Greg Smith a VP with Goldman Sachs publicly resigned leaving a bad mark on the investment bank which has prompted an official reply as a memo directed to all the bank’s employees. Did the last ethical GS banker walked out? or did bonus season not leave enough in his stocking?

Fitch Ratings revised the United Kingdom’s AAA rating with a negative warning, from a previous stable outlook, as it could lose the investment grade if it does not stick to the current debt cutting path. Moody’s issued a similar warning a month ago on the back of some sectors asking for a looser fiscal stance. The current British government was elected on the promise of eliminating the record high 11 percent budget deficit and progress in the first two years have been slow due to Eurozone crisis.

Analysts are debating on what adjetive to add to the slowdown of the Chinese economy. Some have used hard. Adrian Mowat from JPMorgan“China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” Or perhaps it’s a long landing as Michael Pettis mentions the long debate focused on political reform to adjust the growth model.

You can follow the Fed now on twitter: www.twitter.com/federalreserve

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February 24, 2012

UK GDP contraction sparks fear of a technical recession

Filed under: OANDA News — Tags: , , , , , , , , , , , , — admin @ 4:26 am

United Kingdom’s GDP shrank by 0.2 percent in the fourth quarter which prompted the Bank of England Governor Mervyn King to qualify the recovery of the U.K. economy as “slow and uncertain.” King is trying to calm more optimistic views that see England avoiding two consecutive losing quarters as the outlook for the first quarter of 2012 is positive.

The GBP has been boosted by the fallout of the European outlook after the Greek bailout deal was finalized this week. A point of concern is the dramatic drop in business investment as companies are scaling back their spending.

Oil prices have reached an all time high in Europe and the U.K. (EUR 92.75 and GBP 78.53) due to supply concerns and a steady demand. US Dollar weakness has further propped up the price of oil as its the currency of denomination and countries where their local currencies have appreciated will feel a double pain as exports and energy costs both rise.

The G20 meeting that starts tomorrow will focus on the Eurozone crisis and what the role of the group will be going forward. U.S., Chinese and Japanese official have questioned the role of the IMF and want  more assurances that European individual governments and the economic zone as a whole are doing their part to prevent sovereign debt from reaching default status.

The IMF is looking for a 500 billion dollar commitment from the group in order to face the current European crisis. China, Japan and Mexico are willing to help if Europe leadership acts in line with their rhetoric. The U.S. is not seeking to add additional funds until they see “additional steps” are taken to prevent contagion.

February 10, 2012

Reported US Trade Deficit Widens

Filed under: OANDA News — Tags: , , , , , , , , , , , , , , — admin @ 1:29 pm

The US trade deficit for December 2011 (reported by the US Commerce Department) widened by almost 50 billion USD, the most month over month increase since last June. The recent relative weakness of the dollar, coupled with the improving US economy, increased the demand for imports.
More than half of the 2011 deficit came from trade with China. This report comes right before a US visit by Chinese heir apparent Xi Jinping. This data could increase US industry opposition to trade [...]



Read the full article on forexblog.oanda.com.

February 6, 2012

Market Outlook for February 6, 2012

Filed under: Forex News — Tags: , , , , , , , — admin @ 7:30 am

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 6, 2012

Markets rallied on Friday after the release of much better than expected US employment data. The non-farm payrolls data showed an increase of 243,000 in January which was well over the median economist’s forecast of 140,000. Furthermore, the unemployment rate dropped to a three year low at 8.3%. Market analysts, who were extremely bearish at the beginning of the year are now making grand announcements such as ‘the stars are aligning’ to push markets higher. The contrarian in us is now extremely cautious and we expect the USD to make a comeback after losing ground last week as the better than expected data has seen the likelihood of further quantitative easing fall. The EURO has retraced lower during the European trading session to as low as 1.3030 after opening in Asia above 1.3115.

In more sobering news, the situation is coming to a head in Greece with the government there expected to respond to the troika and demands by its international creditors for increasingly severe austerity measures within the next couple of days. It has become apparent that Greece is finding it difficult to come to an agreement with its creditors. The IMF has said that a worsening debt crisis in Europe could cut China’s growth in half. In China, Chinese Lunar New Year sales grew at the slowest pace since the 2009 financial crisis and a full 3% lower than last year at 16%. There are increasing signs of slowing consumer spending in China which does not bode well for the increasing numbers of foreign retailers rushing into the Chinese market. The Australian dollar has eased off highs at 1.0796 on Friday to fall more than a cent to as low as 1.0685 today.

US equity markets rose to their fifth weekly gain last week after the release of the much better than expected US employment data. The Dow Jones is now trading at its highest levels since May 2008 as financial and technology companies gained more than 3%. The S&P 500 closed 1.45% higher at 1,344. Stocks in Asia were largely higher while the continuing Greek tragedy has seen European bourses trading down about 0.5%.

February 3, 2012

Land of the Rising Yen

Filed under: OANDA News — Tags: , , , , , , , , , , , , — admin @ 10:33 am

Japan’s Finance Minister Azumi said that the government will take decisive currency steps if needed and that speculative moves in the currency market are increasing. He and his policy makers can breath a small ‘sigh-of-relief’ after NFP, the market decided to sell the JPY outright! How long is this going to last? These specific market moves are providing better levels to own the currency. Markets have taken the Ministers comments in their stride. Intervention is a rising risk for USD/JPY shorts if the pair falls towards that psychological 75 benchmark. It seems that exporter related sales will continue to cap any upside potential for the dollar. So, fears that the Greek Prime Minister may resign, the uncertainty that the Dutch Government may not want to write down loans to Greece will again make the yen more attractive.

Below are some other highlights of the week:


Asia

  • CNY: Chinese markets resumed trading following the week-long Lunar New Year holidays. Premier Wen said that the Chinese government will enhance the elasticity of the CNY exchange rate in both directions.
  • JPY: Japanese Finance Minister Azumi warned against a renewed rise in the yen and vowed to take firm steps against excess volatility and speculative moves in the FX market.
  • JPY: Japans December IP rebounded +4.0%, m/m, following the -2.7% fall in the previous month (the ‘flood’ knock effect-on from Thailand).
  • JPY: Yen remains sensitive to G10’s yield compression.
  • KWN: Korean IP growth fell to +2.8%, y/y in December from +5.8% in November. This is very much inline with soft export growth in December.
  • SGD: Singapore’s unemployment rate remained at +2% in Q4, despite weakness in IP and GDP growth for the same period. This suggests that the tightness in the labor market is partly structural.
  • CNY: China’s manufacturing PMI rose +0.2pt to 50.5 (higher than the consensus forecast of 49.6). Importantly, the PMI was much stronger than the seasonal pattern for a -0.7pt fall. New orders up +0.6pt to 50.4 while inventory fell -2.6pt to 48.0. Export orders fell -1.7pt to 46.9 while input prices rallied +2.9pt to 50.0. The data reduces the scope for monetary easing.
  • KWN: Korea’s CPI inflation fell to +3.4%, y/y, last month (foretasted for +3.6%). Core-inflation also slowed to +3.2%, y/y, from +3.6% in December. Digging deeper, exports fell -6.6% in January (first negative growth in three-years), providing a – $2.0b trade deficit. Note: Asian data may be distorted by the lunar New-Year celebrations.
  • IDR: Indonesia CPI inflation eased to +3.7% in January as expected. Core-inflation was broadly unchanged at +4.3%, y/y. The futures market expects their Central bank to ease monetary policy further, cutting rates -25bps to +5.75% next week (February 9). Export growth fell to +2.2% in December while import growth surged to +24.3%. The data has narrowed the trade surplus. Is their economy in the first stages of over heating?
  • TWD: Thai CPI inflation fell to +3.4%, in January (as expected). Futures market again expects the Bank of Thailand to cut policy rates by another -50bps to +2.5% by the end of Q2.
  • JPY: Comments from Japanese officials are finding it difficult to halt the yen gains. The perception that JPY is one of the most liquid currencies in the world is been seen as a sound alternative to the two prime reserve currencies, EUR and USD. Their stability and debt-led debasement issues are to blame. This would suggest that it’s only a matter of time before the BoJ appears in the markets directly. A similar storyline is being played out in Europe with the SNB.
  • CNY: China’s non-manufacturing PMI fell -3.1pts to 52.9 in January (less than expected). The HSBC Services PMI was unchanged at 52.5 for a third straight month in January.
  • JPY: Japan Finance Minister Azumi said that the government will take decisive currency steps if needed and that speculative moves in the currency market are increasing.
  • INR: RBI’s Deputy Governor Gokarn said that the central bank may buy dollar rupee to inject INR liquidity.

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