ASIA SUMMARY

Asia was all about the JPY crosses which were weak yesterday in Asia, but found buyers in London. EUR/JPY which was below 160 yesterday took out yesterday’s session highs but found sellers around the 161.75 area. The action was mostly in USD/JPY but we did see EUR/USD grind higher through the recent highs.

It looks like part of the reason was the reversal in the US equity markets which opened lower and closed back to flat. We saw Asia markets higher as well with the Nikkei up 88 points at midday. It looks like the bounce back in equities may have given carry traders the go ahead to drive higher.

Looking forward in Asia, while the market appears to have shrugged off the risks of a fast growing Chinese economy (generally positive for the JPY), risks remain. Chinese inflation could cause higher interest rates in China. A recovering Japanese economy could bring higher interest rates there as well. For now, though momentum appears to favor the carry trade.

Upcoming Data Release (UK Session):

Germany: (2am EDT) German Finance Ministry Publishes its April Report.

France: (2:45am EDT) Month over month consumer spending expected .3% vs. previous -.4%.

Switzerland: (Month over month producer prices expected .3% vs. previous .3%.

UK: (4:30am EDT) Month over month retail sales expected .5% vs. previous 1.4%.