Euro Bull Ahead Of LTRO Repayment Indication
The Asian markets closed the week on a mixed risk sentiment. The Japanese CPI remained weak, as Japan December Core CPI fell-0.1% y/y, -0.2% ex-Food and -0.6% ex-Food & Energy, while Tokyo January CPI decreased by -0.6%, -0.5% ex-Food, and -0.9% ex-Food & Energy. As the decreasing prices kept worrying, the Japanese FinMin Aso stated that the BoJ aim to beat the deflation, rather than to manipulate the currency. In reaction, Yen weakness broadened overnight. JPY lost against all of its major counterparts for the second consecutive day. Currently, USDJPY is at its highest level since June 2010, while EURJPY and GBPJPY registered new highs at 121.42 and 144.809 respectively.
The currency weakness boosted the Japanese shares; Nikkei 225 advanced 2.89%, closing the week at 10,926.65. Outside Japan, the Asian stock markets closed the week in red. Hang Seng lost 0.26%, Shanghai’s Composite retreated 0.46%, while Kospi and Taiex fell 0.91 and 0.30% respectively.
In the North America, the US stocks started yesterday to the upside, amid better-than-expected initial jobless claims data (330K, vs. 355K exp. & 335K prev). However, the US stocks remained skeptical over the day. Dow Jones added 0.33%, S&P500 kept stable, while Nasdaq Composite’s wrote-off 0.74%. In Canada, the Toronto Stock Exchange advanced to its highest level since April 2011. USDCAD spiked at 1.0037 and managed to remain above the psychological 1.00 level, as Bank of Canada kept the policy rate unchanged at 1.0%.
EURUSD powered up in the Asian session, over the speculation on LTRO repayments before maturity by European banks. The EURUSD broke 1.3400 in European opening and hit 1.3419. The Euro bull got support by George Soros, who thinks that “Euro is there to stay and will gain”, as reported by Bloomberg.
Today’s economic agenda consists of German Jan Ifo Business climate, Current Conditions and Expectations index, UK q/q and y/y GDP, Canada’s m/m and y/y CPI, and the US December New Home Sales.