G20 and BoJ comments dominate FX markets

<p>NZD continues to trade from strength to strength, with stronger Q4 retail sales data taking the ‘bird’ above 0.8500. Retail sales came in at a […]</p>

NZD continues to trade from strength to strength, with stronger Q4 retail sales data taking the ‘bird’ above 0.8500. Retail sales came in at a robust 2.1% from an expected 1.4%.

JPY had a volatile session on Gotobi Day, which initially saw good fixing demand for USD/JPY but as soon as the flow passed, comments regarding BoJ Governor candidates and the G20 summit in Moscow this weekend pared back JPY weakness. EUR/JPY fell to levels not seen since January. The markets ignored comments from LDP minister Kozo Yamamoto that currency devaluation spurs growth and USD/JPY between 95-100 is appropriate, focusing instead on reports that PM Abe was close to selecting Toshiro Muto as BoJ Governor who is deemed by the market to support traditional QE measures rather than radical new policies. The consensus view is that PM Abe will make his decision on the BoJ head before his trip to the US.

Focus remains on the G20, with the WSJ reporting that a draft communiqué is being put together by the G20 that will include a general pledge for members to refrain from currency manipulation but they will not single out any particular country or currency. This comes despite calls from Russia to use “stronger and more specific language” on the need to avoid currency manipulation.

Data-wise today we get retail sales from the UK, with the US session bringing us Empire manufacturing, University of Michigan and TICS data.

 


EUR/USD

Supports 1.3255-1.3230-1.3180 | Resistance 1.3400-1.3460-1.3520


USD/JPY

Supports 92.20-91.80-91.40 | Resistance 93.15-93.80-94.45


GBP/USD

Supports 1.5485-1.5455-1.5425 | Resistance 1.5545-1.5575-1.5640

 

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