Yen to Go

This week’s global PMI’s and the ECB’s LTRO program imply that the global growth and liquidity background for Asia should continue to improve. It is now believed that Asia’s economy is likely accelerating away from the Q4 cyclical trough. Investors are beginning to question if too much emphasis has been put on the negativity surrounding Greece rather than focusing on growth. It’s perceived that G3 liquidity could be mitigating some of the debt laden Greek fallout scenarios that have been served up to the public religiously over the past six-months.

The BoJ Governor Shirakawa has reiterated the bank’s commitment to continue easing until it achieves its +1% CPI goal. He also noted that adding liquidity alone is not sufficient to reaching this goal. Higher crude prices continue to weigh on the JPY, as Japanese importers’ demand for the dollar has been consistently steady after the shutdown of nuclear reactors in the country. The reasonably positive risk environment maintains the JPY, just like the EUR, as a preferred funding vehicle.

Below are some other highlights of the week:


  • Central Banks: Central authorities started the week on the proactive side with Bank Indonesia intervening directly.
  • CNY: The PBoC started the week by fixing dollar Yuan higher than the previous Friday’s fix and that trend has remained.
  • AUD: Aussie PM Gillard won a leadership ballot. She garnered 71 votes to ex-Prime Minister Rudd’s 31. We are seeing the emergence of ‘Another Iron Lady.’
  • NZD: The Kiwi trade balance happened to flip to deficit. The trade balance recorded a deficit of -NZD199m in January, much weaker than the consensus forecast of a +NZD167mn surplus. Ex-aircraft, there would have been a small surplus of +NZD14m.
  • JPY: Japan’s Finance Minister Azumi stated that he will take action against speculative Yen moves.
  • KRW: The Korean current account recorded a deficit of -\$0.8b in January. This is the first trade deficit since February 2010, driven by weakness in exports.
  • PHP: Trade deficit improved slightly to -\$1.2b in December from -\$1.6b. Analysts note that net remittances are still larger than the trade deficit, helping to keep the current account balance in surplus. But, the wider trade deficit has narrowed the current account surplus by +50%. Weak electronics exports remain the main problem for the Philippines’ trade surplus. The BSP remains dovish and sees inflation falling to as low as +2.7% in February. The market is pricing in further rate cuts.
  • JPY: Januarys’ IP rose +2.0%, m/m, much stronger than the consensus forecast of +1.5% and in line with recent improvements in the US ISM and European PMI’s.
  • AUD: Aussie retail sales rose just +0.3%, m/m, in January, following two consecutive declines. Digging deeper, construction work done fell by more than the consensus forecast of -4.5%, q/q, in Q4 to -11.7%.
  • NZD: New Zealand reported an improvement in business sentiment and building consents, but this is unlikely to change the RBNZ policy’s stance for now. The NBNZ activity outlook bounced higher in February to 31.2 from 25.7 in December, but remains well below the 2011 peak of 43.7.
  • NZD: Kiwi building permits rose strongly in January, up +8.3%, m/m, versus the +3.4% consensus. Ex-volatile components, building permits rose +3.7%.
  • KRW: Korean industrial production rose +3.3%, m/m in January, much better than the consensus forecast of -0.5%. Digging deeper one notices that service industry output growth slowed to an eleven-month low of +0.9%, y/y in January from +1.6%, y/y in December.
  • CNY: China’s PMI was 51.0 in February, up +0.5 points from January and slightly better than the consensus forecast of 50.9. New orders edged up +0.6 to 51, led by sharp increases in infrastructure related items. The HSBC PMI also rose +0.8 points to 49.6 in February.
  • AUD: Aussie Building approvals rose a less than expected +0.9%, m/m, in January versus the consensus forecast for a +2.0% rise.
  • INR: Indonesia’s inflation surprised lower, falling -0.1% to 3.6%, y/y, this month versus the consensus forecast for a rise to +3.8%. Core inflation remained unchanged at +4.3%. BI recent rhetoric continues to be slightly dovish.
  • KRW: Korean exports rose a much higher than expected +22.7%, y/y, in February, pushing the trade balance back to a +\$2.2b surplus from a-\$2b deficit in January.
  • INR: India’s trade deficit widened. Export growth rose to +10.1%, y/y, in January, while import growth rose slightly to +20.3%. Analysts expect that the RBI easing and improvement in global risk appetite “should see equity inflows that more than finance this trade deficit.”
  • KRW: Korean CPI inflation eased to +3.1%, y/y, in February from +3.4%. However, rising oil prices are likely to keep the BoK on hold.






  • Monetary policy decisions from AUD, NZD, CAD, GBP and EUR
  • Job data comes to us from AUD, USD and CAD
  • Trade/growth data comes from AUD, CAD, USD, GBP and CNY
  • Inflation data is released in CHF and CNY.
  • manufacturing and none PMI is delivered from USD, CAD
  • CAD released building permits


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell