Asian Session Recap – May 27, 2014

  • Nikkei up by 0.23% for the day
  • BOJ ready to exit from stimulus program?
  • Latest CFTC report shows record low JPY net short positions
  • NZIER points to risk of house price declines in New Zealand
  • Swiss trade balance and employment level due
  • U.K. BBA mortgage approvals to show decline in home loans

Yen pairs jumped to life in today’s trading session, as the Nikkei chalked up a 0.23% gain for the day. News that the BOJ is gearing up to unwind its massive stimulus program rocked EUR/JPY and GBP/JPY around, as Reuters reported that discussions regarding a gradual exit strategy are taking place in the BOJ. GBP/JPY jumped to a high of 171.95 before retreating to a low of 171.70 while EUR/JPY dipped briefly below the 139.00 mark.

Aside from the scoop on the BOJ, yen pairs were also affected by the CFTC report showing a drop in net short positions for the Japanese yen. This suggests that traders are starting to position themselves ahead of this week’s set of data from Japan, which should include the impact of the April sales tax hike.

Meanwhile, NZIER warned that further declines in home prices in New Zealand could pose a significant threat to overall economic performance. The agency noted that house sales volumes accounted for a huge chunk of growth in the past months and that the sharp 20% decline in prices recently could wind up hurting lending and demand.

In the next few hours, we’ll see Switzerland’s trade balance and employment level data. The trade surplus is expected to widen from 2.00 billion CHF to 2.43 billion CHF, reflecting an improvement in trade activity, while the employment level could improve from 4.19 million to 4.21 million in Q1. Also due today is the BBA mortgage approvals report from the U.K., which might determine whether the pound can hold on to its recent gains or not.

 

U.S. Session Recap

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