Japan data sees muted yen reaction

We have struggled to see any big moves in the FX space this week and it seems the trend is set to continue heading into the weekend.

There has been some activity on the Japan front with a raft of economic releases hitting the wires early in Asia. Japan’s all important core CPI reading for April came in in line with expectations at +2.3% which was a marked improvement from the previous reading of 0.7%. This showed Japan remains on track with inflation being the key metric the BoJ is watching.

Meanwhile industrial production disappointed as it showed a 2.5% contraction. The overall impact of the data was a slightly firmer yen as USD/JPY declined to around 101.60. However, considering the big moves we are accustomed to seeing in USD/JPY, this move was nothing to be concerned about. It is clear there is a sense of caution prevailing across the global landscape at the moment and perhaps next week will be pivotal for fresh catalysts. For now I feel the pair will continue to find support in the 101.50 region where it has found significant support in the past.

AUD extends gains

Meanwhile, the AUD has continued its run this week with AUD/USD extending its gains in Asian trade in a move that was triggered by yesterday’s encouraging capex numbers. This morning we had private sector credit data which showed a 4.6% rise year-on-year, better than an expected 4.6% rise. Some feel this implies confidence is on the rise.

The calendar is quite light heading into the weekend with the notable releases being personal income and spending along with consumer sentiment and inflation expectations. Perhaps another round of Fed speak will offer some insight on the US economy and what to expect going forward.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.