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The Japanese Yen was sold off broadly and weakness carried on to Asian session. USD/JPY
finally broke through 100 psychological level for the first time in 4 years while EUR/JPY
also took out recent resistance at 131.72. Data from Japan saw investors buy a net total
of JPY 514b in foreign bonds in the weeks up to last Friday. Note that Japanese investors
had been net sellers of foreign bonds most of this year. And the data argues that recent
massive monetary easing is pushing Japanese to investment abroad. Other data from Japan
saw current account surplus came in narrower than expected at JPY 0.34T, Eco watch current
gauge dropped to 56.5 in April. Technically, note that USD/JPY, EUR/JPY, GBP/JPY and CAD/JPY
have resumed the recent uptrend and we'd expect more broad base selling in yen in the near
term. Another development to note was the weakness
in Aussie. AUD/USD dropped through an important support at 1.0115 and is now heading back
to parity. Famous investor Stanley Druckenmiller was quoted that saying the Aussie will "come
down hard". Earlier this week, it's reported that George Soros is behind a USD 1b bet that
the Reserve Bank of Australia would cut rates this week. Meanwhile, in the quarterly economic
statement, the RBA lowered the inflation forecast to 2.25% by the end of this year, down from
the prior projection of 2.5%. Growth is projected to be at a sluggish 2.5% and stay below trend.
The central bank said that "the outlook for non-mining business investment remains relatively
weak over the next few months", and "the approaching peak in resource investment, the high level
of the Australian dollar and ongoing fiscal consolidation are all likely to weigh on growth
over the next year or so." In US, yesterday's jobless claims data raised
speculations that the Fed would taper quantitative easing measures earlier than expected. Comments
from Fed officials delivered mixed message on the issue. Philly Fed President Plosser
reaffirmed his hawkish view that quantitative easing should be slowed as it has contributed
little to boosting the job market. Yet, the Chicago Fed's Evans affirmed that "during
the time that we've been doing our asset-purchase program, the labor market has definitely improved"
and he would like to see sustainable "improvement in the labor market throughout the summer".
Looking ahead, the UK will release trade balance in European session and Canadian employment
data will be the main focus in US session. The Canadian job market is expected to grow
13,500 in April with the unemployment rate to be unchanged at 7.2%. Fed Chairman Ben
Bernanke will speak at a Chicago Fed Conference on "Monitoring Finance". And over the weekend,
G7 Finance Ministers and central bank governors will meet in London.