FXstreet.com (Barcelona) - Kit Juckes, Head of Currency Strategy
at Societe Generale begins the day noting that Yen correction and
risk correction have greeted him this morning while US Retails
Sales, if strong enough, may revive ailing risk spirits.
He begins by noting that Japanese Economy Minister Akari Amari
warned overnight that excessive yen weakness would cause a spike in
import prices, and in so doing, triggered a correction in the
strongest trend in currency markets. Official comments on policy
and the currency have been one-way traffic - weakening the yen -
since the elections last month. Juckes comments, "I suspect that
thee is near-unanimity in the market that the yen has fallen too
far, too fast, but also enthusiasm to sell into corrections such as
this. Such consensus argues for a choppy market for now, rather
than clear direction."
He notes that the EUR/JPY correction that has accompanied the
USD/JPY fall, has also served to stop the EUR/USD advance, and
indeed, may boost other currencies in Europe vs the Euro on purely
technical grounds today. If nothing else, he feels that it that
argues for a temporary stop in the EUR/CHF spike.
Looking to the UK, he notes that the High Street is at risk of
turning into wall to wall coffee shops as internet challenged
retailers bite the dust. He writes, "HMV the latest to call in
receivers, and while this isn't 'news' it adds to the sense of
gloom surrounding the UK and with it, the pound, EUR/GBP is holding
above 0.83 and looks set to rise further in the near-term. UK PPI
and CPI data should see little change today, with core PPI output
prices +1.5% y/y, and CPI 2.7% y/y."
He feels that concerns about US Christmas sales (particularly of
phones and tablets) dented equity markets and took the shine off
global risk sentiment. He finishes by writing, "We can also start
to fret about the debt ceiling any time we want. The US data this
afternoon is important in this regard. We look for upside surprises
in both retail sales (0.8% m/m headline, 1.1% ex autos) and the
Empire State Manufacturing survey). That may boost risk sentiment
somewhat."