Japan dominates wise money markets

Japan is at the forefront of the wise money’s minds as the currency’s weakness continues to extend, leading to pressure in closely linked currencies and markets particularly in Asia, especially in Korea.Japan dominates wise money marketsThe market is evidently giving BoJ governor Kuroda the benefit of the doubt and it seems that there are ample JPY sellers on any rally in the currency.

One should be careful about the ability of USD/JPY in the short term to move much higher.

It is obvious that the trend seems set for additional JPY weakness and it is worth noting that speculative JPY trading is not yet at significant levels.

Within Europe concerns have not relieved to any noteworthy degree with some praise for Portugal’s efforts to survive a legal court ruling on strategic budget cuts but little development elsewhere including in Italy where there is no sign of any agreement on the construction of a new government.

Stock markets in the US finished higher but the market will now look to a host of Q1 earnings statements over coming weeks as the US earnings seasons kicks in.

Commodity prices remain fragile, with the Commodity Research Bureau (CRB) commodities index at its lowest level in several months pointing to a more negative outlook on the growth front.

Back to the UK and Sterling has recently underperformed against the euro and US Dollar however this could be short-lived given the force of negative influences building up for the single European currency.

A possible jump in February UK industrial production today will build on the improved reading for UK March house prices as shown in the RICS data this morning while the BRC retail sales survey also came in better than expected with like-for-like sales rising by nearly 2% in March.

The stronger data readings could start a rally on the pound over the short term and could possibly help to fuel short covering in a speculative market that is still heavily short Sterling.

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