Forex Market Update

JPY

Well it looks like we are back playing Rate Rhetoric game in Japan. This time Central Bank Board Member Suda said the BoJ is “not behind the curve” and “rates will likely stay low for some time.” This does not’t reflect well on the creditability of the BoJ and the markets continued to sell JPY. Merchands Trade Balance came in slightly lower then expected as import prices in fuel cost and industrial inputs creep up. We still see weakness in the JPY as traders see growth opportunities in other regions and interest rate differential make the JPY the obvious funding choose.

AUD

Australian Consumer Prices blew right by analysts expectations hitting 1.6% QoQ and 4.0% YoY. Much higher then the RBA’s comfort zone of 2-3% inflationary target. This new figure has traders speculating on further rate hikes past next week’s .25bp% tightening to 6.00%. We see continued strength in the AUD and believe it be on the best near term trade.