At 10:50 AEDT today we get the latest TANKAN survey out of Japan and the outlook components could be the most important. This will give the BoJ and the market the feelings from a number of key Japanese businesses on the outlook from their trading environment, taking into consideration the sales tax hike, which also kicks in today. Today is also the start of the new Japanese fiscal New Year and this could be interesting as well for financial firms looking at overseas assets again. A weak print today in the various sub-components should be good for USD/JPY and the Nikkei, as it strengths the proposition that the BoJ could be ready to increase its asset-purchase program.
At 14:30 AEDT we get the RBA meeting and I’d expect a very similar statement form the RBA. No action is expected from the central bank, while Glenn Stevens had every opportunity to talk down the currency at last week’s speech titled ‘The Economic Outlook’ – but failed to do so. It seems likely the bank will continue to say the local unit is still high by historical standards, so this could cap the rallies in the AUD. However, I have been looking at the AUD mostly against the crosses, with short GBP/AUD and EUR/AUD working well recently. In European trade we also get European manufacturing PMI figures and weak numbers here could throw up the idea that the ECB could cut rates and also the deposit rate. The EUR could be hit fairly hard if they cut the deposit rate.
Gold looks like it wants to go lower and my view has been that we are at an inflection point for the USD and therefore gold as well (given the inverse relationship). In US trade tonight we get the latest US manufacturing ISM report and a good number here could see USD strength and thus gold could continue heading lower. I would be selling gold on any rallies and would look for a test of $1262 in the short term.
Iron ore rallied 4% yesterday, so this will certainly help the miners. We also get the official and HSBC manufacturing report at 12:00 and 12:45 (AEDT) respectively.