Week in FX Asia -Yen Bears Are Beginning To See The Light

The Yen bears will take anything – at this point they do not really care. After a month of struggling to break the psychological ¥100 barrier, the bears must now feel more confident after Friday’s NFP print that another positive US data print over the next two-weeks could finally prove to be the catalyst that allows the market to punch through this imaginary barrier.

Friday’s US employment headline employment print (+165K) coupled with the previous two-months strong revisions higher (+114k) has favored the ‘mighty dollar,’ sending it higher, temporarily at least, against both the EUR and JPY as the market remembers that the Fed can also ‘decrease’ its bond buying, as reiterated earlier this week at the FOMC meeting. USD/JPY quest may be made easier this time around if there are not as many option barrier plays built up just under the ¥100.

Despite Abenomics continuing to attract its share of skeptics, Kuroda’s bold efforts to reinvigorate his economy is clearly driving improvements in sentiment and inflation expectations (April manufacturing activity – 51.1 vs. 50.4 and March IP up for the fourth straight month +0.2%, m/m), which in turn should provide a solid base for further fundamental gains. A weaker Yen continues to boost export demand while household spending continues to rise and Japanese unemployment rate falls (+4.1% vs. +4.3%). Even offbeat measures (core-core CPI) suggest that the BoJ’s drive to +2% inflation target is on the move.

“It is just a matter of time until the rest of the world catches up with the reality of how Japan’s experiment affects them. The hope is that, bolstered by evidence of Japan’s serious pursuit of structural reforms, they will accommodate the experiment in two ways: by not retaliating, and by undertaking their own domestic reforms that compensate for the output lost to Japan. In other words, a growing pie for all better accommodates all” – Mohamed A. El-Erian, CEO PIMCO

• PBOC Cuts Fixing as Yuan Retreats From 19-Year High
• Expansion in China’s Services Sector Slowed in April
• Japan Monetary Base Grows 23 Percent Year over Year
• Japan Stock Exchange Loses for 4th Session in a Row
• China Factory Growth Eases Putting Recovery at Risk
• South Korean Won Climbs to 7-Week High
• Singapore consumers confidence rising
• Singapore Bank no longer World Safest with Qatar Tops
• USD/JPY Near 97 as Fed Seen Holding Easing
• AUD/USD at 1.0370 as Markets Bet on Fed Stimulus
• Bank of Japan Board Member Profiles
• Japan to Expand Trade by Joining TPP
• Chinese State Owned Enterprises Biggest Losers in 2012
• Japan Household Spending Surges
• Singapore Wage Cost to Increase in 2013 – MAS
• Indian Property Prices Rising Steadily Despite Economic Slowdown
• Asian Stocks Rally Up to 2008 Levels
• Nikkei 225 heavily influenced Fast Retailing market value
• Japan Industrial Production Rises at Slower Pace
• IMF Warns Emerging Asia about Asset Bubbles
• A$12 billion Decline in Tax Revenue for Australia in 2013

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