It seems that we are back into the trading patterns that we had at the start of the year, equities are coming back nicely bid on a daily basis and the dollar keeps heading south. The DXY is currently trading around 88.60, just 20 points north of the year’s low at 88.44. Both Euro and Kiwi are back near yearly highs and the safe haven Swiss Franc and Japanese Yen have both high new fresh high levels in the last trading sessions.
Both Jpy and Chf levels will have their respective central banks keeping a careful eye on the currency moves today and experienced BOJ watchers wouldn’t be surprised if the ‘intervention button’ in Tokyo hasn’t been brought out of the cupboard and dusted off ready for action! With the Chinese New Year in full swing and a ‘Friday’ trading session due I wouldn’t be massively surprised if they took advantage of thinner liquidity to give it a test run today, especially if it’s starts to gain momentum at any point. This of course despite Japan’s Finance Minister Aso saying that “the Yen isn’t rising abruptly enough for us to intervene” yesterday.
It’s a relatively quiet day ahead in terms of fundamental economic data releases and that would normally lead to smoother trading conditions in the currencies, however as we are sitting at some key levels in several currencies there is a strong possibility of big moves in the market. The Aussie market will be keeping a close eye on RBA Governor Lowe’s comments to the Standing Committee on Economics this morning but after that it’s pretty quiet in the Asian session today. The focus will once again switch to sterling in the London session as UK Retail Sales data is due and US Building Permits will provide a short term distraction into the NY session.