Yen hits highs

The Japanese yen traded at 3 week highs against the dollar and the Euro yesterday amid concerns that the G7 may issue a statement censuring yen weakness. However, the likelihood of that materialising has continued to deteriorate, with US Treasury Secretary Paulson insisting that the currency is trading competitively in the open market and that there hasn’t been government intervention since 2004.

The dollar eased 0.3 per cent to $1.2955 against the Euro despite weaker Euro zone retail sales and German factory orders in December. The soft nature of these releases has had little impact on the view that the ECB will tighten rates again probably in March and then later in the year.

Sterling was buoyed by robust retail sales numbers released by the British Retail Consortium; the fastest growth of January spending seen for 3 years, another reason for Merve to think about surprising the market again this week?

The RBA kept Aussie rates on hold last night at 6.25%. Today we see the release of UK and German industrial production, across the water all eyes will be on non-farm productivity and consumer credit data.

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