US Signals All-Clear on BOJ Policies

A hint that the US has no problem with the Japanese policies that have weakened the yen. The euro was the top performer on the day while the yen lagged. Japanese consumer confidence and machine tool orders are the highlights as Japan returns from holiday.  The trades from the Feb 8 Premium Insights were updated, with an addition in gold, silver and oil. 2 EURUSD trades remain in progress, so do USDCAD, EURGBP and oil.

US Treasury undersecretary Brainard told reporters on Monday that his country supports Japan's efforts to reinvigorate growth and end deflation.

The comment was slow to circulate but it appears to be a signal that the US has no intention of forcing a showdown with Japan on FX. If that's the case, the rest of the G20 will likely fall in line at meetings beginning in Moscow.

USD/JPY was at 93.40 before the comment and hit a fresh cycle high at 94.40 after the comment. Yen crosses were similarly strong.

Earlier in the day, it was the ECB's Weidmann who jolted markets. The euro jumped a half-cent when he told reporters the currency isn't seriously overvalued and pledged to defend market-based rates. The rally stalled ahead of Friday's high of 1.3430 and has drifted back to 1.3390.

Today's calendar features Australian Jan NAB business confidence at 19:30 GMT. The prior reading was minus-4.

Later, the focus is on Japan with Jan consumer confidence at 0000 GMT; the prior reading was 39.2. An hour later, preliminary Jan machine tool orders will be released and will look to rebound from a 27.5% y/y fall in December.

China is on holiday all week.