The yen is higher in Asia-Pacific trading as regional stocks decline and Japan’s current account surplus beat expectations. With USD/JPY trading below 80, Japanese Cabinet Secretary and potential PM Edano said they are watching FX moves closely. Swiss employment and German industrial production are highlights of the upcoming European session.
Risk aversion has carried over from a soft US close. The Nikkei is down 0.4% while futures on the FTSE were off 0.58% and on the S&P 500 they are down 0.23%. Copper is down 1% and precious metals are also down slightly.
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Japan’s current account surplus was stronger than expected in April (at ¥405.6B compared to the ¥210.0 expected). The CA figures provided only a small boost as it fell 69.5% y/y due to the disaster. Edano may be talking about intervention but the risk remains remote at these levels.
AUD and NZD are lagging despite upbeat Australian lending data. Home loans increased 4.8% in April compared to the +2.3% expected. It was the largest rise since March 2009.
Anticipation about Thursday’s ECB decision should limit volatility in Europe to an extent. The early focus will be on the Swiss unemployment rate, which is expected to fall to 3.0% from 3.1% but this report rarely moves FX. German and French trade figures will be released but the highlight won’t come until 1000 GMT with the release of German April industrial production. The consensus is for a 0.2% rise versus the +0.7% prior. The market may have built in slightly higher expectations due to yesterday’s factory orders data.