With US markets closed for President’s day today, it’s likely to prove a slower start to the week, but as we know, it’s not just about the US anymore, with much of the recent volatility being triggered by events beyond US shores. Overnight, we’ve seen weaker than expected data in Japan showing the economy contracted some 0.4% in the final quarter of last year. Japan has contracted in half of the previous 16 quarters, with only one period of contraction more than two quarters. In other words, it remains an economy struggling for sustained momentum. Data from China has also been mixed with exports falling markedly, although an even larger fall in imports allowed for a better than expected reading on the trade balance data. The volatility in markets continues unabated, with the Nikkei more than reversing Friday’s weakness, up more than 7% towards the close. USD/JPY has reversed upwards as well, but in a relative sense the yen still remains on the firm side for the month so far.
Elsewhere in the world of FX, the modestly corrective tone continues, with the Aussie higher from the Thursday lows and the euro also correcting from the firmer tone seen of late. Equities also starting on a firmer footing, with financials leading the gains once again. Gold is more than 2% weaker in Asia trade, but after the sharp gains seen last week, that’s merely a rounding area in light of recent moves. The yuan has appreciated substantially, with comments from PBOC Governor also helping over the weekend to curb speculators on the currency. Note that ECB President Draghi speaks in front of the European Parliament later today (scheduled for 14:00 GMT) and in light of the lack of US data, this could drive sentiment in the latter half of the European session.
Disclaimer: This material is considered as a marketing communication and does not contain and should not be construed as containing investment advice or an investment recommendation, or, an offer of or solicitation for any transactions in financial instruments.
Past performance does not guarantee or predict future performance. FxPro does not take into account your personal investment objectives or financial situation and makes no representation, and assumes no liability to the accuracy or completeness of the information provided, nor for any loss arising from any investment based on a recommendation, forecast or other information supplied from any employee of FxPro, third party, or otherwise.
This material has not been prepared in accordance with legal requirements promoting the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. This communication must not be reproduced or further distributed without prior permission of FxPro.