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The Japanese Yen remains the focus in the Asian session today as USD/JPY edged even closer
to the 100 psychological level and EUR/JPY is just below 130. NZD/JPY remains the strongest
cross this week as the kiwi was boosted by comments from the Reserve Bank of New Zealand
deputy governor Spencer that house prices and credit expansion could trigger a monetary
policy response. The Euro caught up with EUR/JPY as the second strongest pair this week. Indeed,
the Euro is broadly firmer with EUR/USD staying well above 1.3 while some strength was also
seen in EUR/GBP and EUR/CHF. AUD/JPY is also strong as supported by inflation data from
China. In the US, Fed chairman Ben Bernanke said
that the economy is "significantly stronger than it was four years ago" but is still "far
from where" they all want it to be. He said that "most of the world's major industrial
economies are engaged in expansionary monetary policy and overall that's mutually constructive."
Meanwhile, "resilience" of the US banking system has "greatly improved" since the stress
tests. He noted that the more intensive use and greater sophistication of supervisory
stress testing, as well as supervisors' increased emphasis on the effectiveness of banks' own
capital planning processes, deserve credit." In Europe, Spanish Prime Minister Rajoy urged
European Central Bank leaders consider whether the ECB should have the "same power" as other
central banks and give themselves the instruments that other countries have. Rajoy was indeed
referring to the fact that the Fed and Bank of England could print money through quantitative
easing and the Bank of Japan could implement a huge monetary stimulus package. While the
ECB still has a wide range of tools, it must justify any unconventional measures by aligning
them with the single mandate of price stability. Portuguese Finance Minister Gaspar said that
the troika will "make an additional visit" after the constitutional court rejected a
number of austerity measures last week. Released today, China's consumer price index
slowed more than expected to 2.1% year on year in March whilst the Producer Price Index
dropped 1.9% year on year. That compared to expectation of an increase of 2.5% and a drop
of 1.8% year on year respectively. The data showed there is little inflationary pressure
which could help China to maintain a relatively accommodative policy for now. Other data released
in the Asian session saw the UK BRC sales monitor rise 1.9% year on year in March and
the RICS house price balance improved to -1 in March. And Released in Australia NAB business
confidence rose to 2 in March. Looking ahead, UK data will be the major focus
today with industrial and manufacturing production and trade balances featured. The Swiss will
release the unemployment rate, CPI and retail sales. And in the US Session Canada will release
housing starts and building permits.