The main change overnight in Asia has been weakness in the JPY, with USD/JPY up at 98.10 from a North America close Monday around 97.25, while EUR/JPY is at 130.15 from around 128.35. The support the JPY had been garnering from year-end repatriation flows has now seemingly dried up. Rather the market is concentrating on the release of tomorrows Tankan report. Speculation is that the BOJ report will show business confidence slumping to a 30-year low.
Elsewhere the USD is a little lower, EUR/USD up at 1.3250 from a North American close Monday around 1.3200, while cable is up at 1.4310 from around 1.4265. The USD’s reserve currency status is again being called into question. A source at the BOJ has raised the spectre of the IMF raising funds through issuing SDR bonds which China would buy to the tune of about $250 bln equivalent.
Talk of a new Japanese stimulus package has helped lift sentiment in Asia, which has also weighed on USD and JPY a little.
We’ve already had the release of German February ILO unemployment, which rose to 7.4% from 7.3% in January.
Economic data releases for the rest of the day are as follows:
07:55 GMT: German unemployment change (Mar) expected 52k
07:55 GMT: German unemployment rate s.a (Mar) expected 8.0%
08:00 GMT: Italian retail sales s.a (Jan) expected -0.2% m/m, -2.0% y/y
08:30 GMT: UK index of services 3m/3m (Jan) expected -1.0%
09:00 GMT: Italian CPI (Mar) provisional expected 0.1% m/m, 1.0% y/y
09:00 GMT: Euro zone CPI estimate (Mar) expected 0.7% y/y