With the announcement from the U.S on the Chinese tariffs, the reaction on the policy side from China will be the key event to watch in the coming days, if China does react with further escalation in tariffs, the U.S. equity market as well as the dollar-yen or Australian dollar could face further downward pressures.

Shinichiro Kadota

Categorized in : Business

U.S. data related to housing and private consumption, which are swayed by winter conditions, bear watching.

Shinichiro Kadota

It is doubtful the market tried to factor in the possibility of the Fed raising rates this year on the inflation number, but the Fed is 'data dependent' so it reacts positively to upbeat data, nowotny's comments also hurt the euro, so the stage was set for participants to cover shorts in the dollar.

Shinichiro Kadota

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It's difficult to quantify how much the currency market has factored in the possibility of Greece missing the June 5 repayment deadline, greek debt yields provide only a rough guide, and although a missed deadline will not spell default, market concern remains high.

Shinichiro Kadota

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At the review we expect the Fed to drop 'patient' and send a message that it is ready to hike rates depending on economic data. Against such a background, the euro remains the most vulnerable versus the dollar, eCB's QE continues to take a toll on the euro. Euro zone bond yields were thought to have mostly priced in the QE launch beforehand, but the magnitude of their decline has shown that such expectations were premature.

Shinichiro Kadota

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Although the headline payroll figure was weak, when you look into details, the outlook remains solid and there isn’t anything that would prevent the Fed from tapering next month, the dollar/yen is now at the top end of its trading range, its 2019 peak of 112.40, so I do expect heavy selling there for now. Still, should it break that level, we could see the dollar rising to 113 or 114 handle quite easily.

Shinichiro Kadota

Risk sentiment is quite positive right now and we expect it to remain so this year, with growth expected to rebound quite strongly.

Shinichiro Kadota