ASIA SUMMARY

Asia saw another wild session spurred in part from economic data out of Japan, a change in tax laws in the UK and news concerning this weekend’s G7 meeting. We saw JPY sell off hard after the much worse than expected Japanese machine orders which came in at -5.2% month over month vs. expectations of -4.%. EUR/JPY made new multi-year highs and USD/JPY broke through the NY session highs and the knee jerk reaction was sold as we saw EUR/JPY trade to new session lows and USD/JPY broke back through 119.

We also saw GBP/USD rallied sharply through the NY highs as an article in the Financial Times highlighted the potential for the UK Treasury to allow British-based multinationals to repatriate foreign profits tax-free. For those that remember, in 2005 the dollar was helped in part by similar tax advantages for repatriated profits.

In a political maneuver, perhaps in retaliation to US ambitions for fair trade from China, China withdrew its invitation to this weekend’s G7 meeting. The potential implication for currencies is a lower dollar and risk reduction (as in reduction of carry trades) as the full extent of a trade war is mostly an unknown.

Upcoming Data Release (UK Session):

Germany: (2am EDT) Month over month wholesale price index expected .5% vs. previous .4%.

Japan: (2am EDT) New Bank of Japan members to hold their first press conference.

France: (2:45am EDT) Trade balance expected -2.8 previous -2.8 billion euros