Intraday Market Thoughts

Big Week Starts with Japan Retail Sales

by Ashraf Laidi
Apr 27, 2014 23:00

The FX market was filled with groans last week over the lackluster volatility but the week ahead promises to be busier. Japanese retail sales are up first. Last week, the yen was the top performer while the loonie lagged.

A few of the questions that will be answered this week:

Will the ECB cut rates? (Eurozone inflation Wed) Will the BOJ edge toward easing? (Inflation forecast due Wed) How worries is the Fed about low inflation (FOMC on Wed) How did the US economy respond in Spring? (ADP, NFP, ISM manufacturing, PCE, vehicle sales)

First, at 2350 GMT we find out how much of a race it was to the Japanese shopping centres in March ahead of the consumption tax hike. An 11% jump in sales is expected as shoppers attempted to beat the hike. A miss is likely to be seen as an outlier that doesn't change the underlying dynamics of the economy.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR +26 vs +28K prior JPY -67K vs -69K prior GBP +48K vs +51K prior AUD +16K vs +8K prior CAD -35K vs -35K prior CHF +14K vs +14K prior NZD +20K vs +20K prior

The Australian dollar longs are rushing in. Over the past 4 weeks AUD/USD is virtually unchanged but the net in this report has shifted from -20K to +16K. That means all those fresh buyers are very close to underwater.

Premium subscribers will see the title of this week's theme trades to be “On yen Consolidation”, with trades on USDJPY and CADJPY issued on Wednesday and Thursday respectively.  Our bias over the last 2 months favoured USDJPY, hence the 260-pips over the last two longs. But have things changed now? Is the change in our bias a reflection of change in trend or is it corrective?
Act Exp Prev GMT
Retail Trade s.a (MAR) (m/m)
0.3% Apr 27 23:50
Retail Trade (MAR) (y/y)
11.0% 3.6% Apr 27 23:50

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