Yen Takes The Lead As Markets Remain Calm

Today’s Economic events

Australia AIG construction Index 46.1 vs. 46.3 previously

ANZ Job advertisements -1.20% vs. 0.90% previously

BoJ Governor Kuroda speech

Japan leading indicators 101.40% vs. 101.60%

Germany factory orders m/m -0.10% vs. -0.40%

Swiss Forex currency reserves 571bn vs. 575bn previously

BoE Member Haldane speech

Eurozone Sentix Investor confidence 5.5 vs. 8.8

Coming up

US Labor markets conditions index m/m

FOMC Member Brainard speech

FOMC Member Fischer speech

US Consumer credit m/m

New Zealand Manufacturing sales q/q

The markets continued the theme from Friday as the Yen remained firm in today’s session. The Yen was seen to be gradually strengthening following late Friday’s rally which fizzled out after the US non-farm payrolls were released. The Yen was also supported by comments from BoJ’s Kuroda early today who stuck to his previous rhetoric that monetary policy would be adjusted without hesitation if need be but that the Central Bank was not looking at taking additional policy steps at this point in time. He was optimistic that the negative rates would play a big role in lowering interest rates and that combined with QQE inflation would accelerate to the 2.0% target range.

The most recent inflation data from Japan, released on February 26th showed the BoJ’s core inflation rising 1.10% on a year over year basis, easing from 1.20% growth rate a month ago. The Asian equity markets were mixed with the Nikkei225 down -0.61% while the Shanghai Composite gained 0.85%.

Over the weekend, at China’s National People’s Congress event Chinese Premier Xi Jinping unveiled a series of plans which includes over five to six million state workers being laid off over the next two to three years, mostly from the coal mining industry while also planning to cut taxes and introduce deregulations and reductions in state spending. The economic reforms are expected to boost manufacturing which has slowed down significantly over the past months followed by a series of monetary policy easing from the PBoC.