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The Nikkei will be in focus ahead of CPI data today. Yen weakness this week has been the primary driver of Nikkei strength and that trend is set to continue at the open today, with our current call suggesting it will open 0.4% higher at 15,700. The CPI data will be out at 10.30am along with industrial production figures. CPI ex-food and energy is expected to rise 0.2% (from a previous reading of 0%). Investors would really want to see inflation tracking well to hit that BoJ 2% target.
The pair is near its highest level since January as we continue to get some hawkish commentary out of the BoE. Mark Carney effectively ended mortgage loan incentives in a bid to restrain the UK housing boom. The pair rallied to a high of 1.6357 and came within touching distance of this year’s high of 1.6328, which was printed in January this year. A break here would see cable trade at its highest level since August 2011. Later today we have a house price index report, net lending to individuals and mortgage approvals which could be a source of volatility.
Encouraging data out of the eurozone also saw the euro extend its gains. The main focus was on releases out of Germany where a better-than-expected CPI print (+0.2% versus +0.1% anticipated) helped alleviate some of the deflationary concerns. EUR/USD is holding its ground above 1.36 and could experience some volatility later today with German retail sales, French consumer spending and the region’s CPI flash estimate due out.
Mining services firms will be in focus today after a poor performance yesterday driven by the Forge Group downgrade. MND shares dropped below support at $17.50 and look poised for further near-term weakness. Next support level is at $15 which could be a potential target for shorts.