Yen Rise Noda Fundamental

The BoJ 2-day meeting left its monetary policy unchanged, left its asset-purchase size unchanged at +JPY40t and its credit lending program unchanged at +JPY30t. That was in line with market expectations. The BOJ said it will pay “particular” attention to the global markets in an implicit promise to help ease any market strains that might emerge after the Greek election. The BoJ gave a relatively upbeat assessment of the economy’s improvement and even noted that exports had improved, a potential signal that the MoF concerns about a strong Yen may be “off-base”. However, not according to Noda, reminds on intervention risk as Yen rise is not fundamental.

Below are some other highlights of the week:


  • CNY: Last week-end data showed China reporting better-than-expected numbers. China’s exports grew +15.3%, y/y, in May or +4.3%, m/m, seasonally adjusted, much stronger than the consensus for a +7.1% rise. More encouragingly, imports also surprised to the upside, rising +4.8% or +12.7%, y/y, after a subdued +0.3% rise in April. Overall, the trade surplus has widened slightly to +USD18.7b in May from +USD18.4b in April.
  • CNY: Other Chinese macro data continues to suggest that there is more room for PBoC to ease, now that inflation has fallen further to +3%, y/y, in May from +3.4% in April and +3.6% in March. IP rose +9.6%, y/y, and retail sales were up +13.8%, while fixed asset investment was up +20.1%.
  • NZD: Kiwi manufacturing activity declined -1.8%, q/q, in Q1, compared with a revised +0.9%, q/q, increase in the Q4.
  • JPY: The IMF has advised the BoJ to ease further. IMF staff believes that “additional easing could be delivered, including by expanding the AP program”. This would help increase the likelihood of Japan achieving its +1% inflation goal by the end of 2014.
  • IDR: Bank Indonesia kept policy rates unchanged at +5.75%, in line with consensus and are expected to take steps to improve supply of dollars in the market to ensure IDR trades in line with its “peers and economic fundamentals.”
  • CNY: China’s new yuan loans rose +CNY793b in May, exceeding analysts’ estimates of +CNY700b ((YTD new loans is at +CNY3.9t), +11% above the same period last year. This strong pickup should support IP.
  • AUD: Aussie’s NAB business conditions fell to a three-year low of -4 in May from 0 in April. NAB business confidence also posted a sharp fall, down 6pts to -2 in May.
  • NZD: New Zealand’s REINZ Housing Price Index rose 1.7% mom to 3391. House sales gained 24% yoy in May on the continued strength of the Auckland and Canterbury property markets.
  • AUD: Aussie Westpac Consumer Confidence Index improved marginally to 95.6 this month from 95.3 in May. Digging deeper, global concerns continue to keep consumers cautious, while weakness in industries, ex-mining, were also weighing on sentiment.
  • RBA: Governor Glenn Stevens said that Australians “should not wish too quickly for a lower exchange rate because the high currency is giving benefits to consumers and is one of the ways the wealth of mining boom is spreading.” That makes it expensive for the Bundesbank then, eh?
  • Moody’s: Retained its stable outlook for Australia’s Aaa foreign and local currency ratings.
  • CNY: Local press reported that the Chinese government may ease policy further in several ways. First, would be done by easing restrictions on loans to selected local governments and property markets. Second, authorities could increase credit availability for railway and road projects and finally, policy makers could allow the refinancing of some local government financing vehicles.
  • JPY: Japan’s machinery orders increased more than forecast in April, rising +5.7%, m/m, after a +2.8% drop in March.
  • KRW: Korea’s jobless rate fell to a four-month low of +3.2%vs. +3.4%, last month as hiring in the service sector continued to increase.
  • NZD: The RBNZ left policy unchanged, as expected. The statement dropped comments in its policy statement suggesting possible easing to weaken the NZD. Governor Bollard made clear that he would prefer a weaker currency, but that he was not yet prepared to change monetary settings enough to deliver this.
  • AUD: Aussie consumer inflationary expectations fell sharply to +2.3% in June from +3.1% in May.
  • PHP: Philippines’ exports recorded a strong +7.6%, y/y, gain in April following a revised +0.8%, y/y, decline in March. It’s worth noting that the sharp fall in electronics exports poses concern about the sustainability of overall export growth.
  • JPY: Noda reminds on intervention risk as Yen rise is not fundamental.
  • BoJ: Japanese policy makers left its monetary policy unchanged, its asset-purchase size unchanged at +JPY40t and its credit lending program unchanged at +JPY30t (in line with market expectations). The BOJ said it will pay “particular” attention to the global markets in an implicit promise to help ease any market strains that might emerge after the Greek election.






  • All currency positions await the Greek election outcome on Sunday
  • USD has the Fed to contend with midweek. Hints of QE3?
  • G20 meetings will monitor this week’s global events
  • GBP has Claimant count changes, CPI and MPC meeting minutes to contend with
  • Sales data is delivered from GBP and CAD
  • EUR is expected to be influenced by German economic and business sentiment
  • USD has weekly claims, existing home sales and Philly Fed Manufacturing to digest
  • Midweek has CNY flash manufacturing and NZD growth numbers to deliver
  • Core CPI rounds off the event risk week for CAD


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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