Archived IMT (2011.04.17)

China raises RRR over the weekend, the 4th of the year. COT data shows multi-year high spec interest in euro longs, Yen remains under pressure. G20 sees global economic recovery as more sustained while pledging greater scrutiny on FX imbalances. New Zealand CPI data looms key in Monday Asia following a particularly strong week for NZD. Earnings season gets underway with more banking and tech heavyweights.

Washington DC summit of G20 finance officials and other dignitaries over the weekend struck a more optimistic tone. Official communique called the global recovery more sustained despite heightened Middle East uncertainty. However, member nations were also more willing to expand the organization's oversight umbrella. While declining to list nations under added scrutiny, G20 said they would give more focus to FX policy (ie, Fed's Quantitative Easing, China's FX regime, etc.) in the context of their fiscal imbalances. Having fired this "warning shot", G20 further noted specific recommendations for dealing with imbalances will be unveiled at the November summit.

CFTC commitment of traders report highlights include positioning changes in EUR, JPY, AUD, and Mexican Peso. Euro net long stood at nearly 65K contracts, 4th consecutive increase and the highest exposure since late 2007. JPY continues to generate carry-funding interest, as net short contracts fell to 52.9K from 43.2K prior - a 1-year high in overall short positioning. AUD finally saw a marginal decline from net long interest at 90.6K contracts vs prior 90.9K, as Mexican Peso attracted more attention with almost 125K net long contracts vs 119K prior - a new multi-year high.

Monday Asia session includes the release of quarterly New Zealand CPI data expected to fall to 1.0% q/q from last quarter's 2.3%. Kiwi dollar traded within a pip of the psychologically significant $0.80 handle, also outperforming the high-flying AUD last week with AUD/NZD cross falling over 300 pips toward NZ$1.32. NZD remains supported by RBNZ Gov Bollard comments on Apr 11th foreshadowing active policy respose to the threat of inflation, suggesting Kiwi central bank may soon reverse some of the 50bps of additional accommodation provided at the last policy meeting. Euro will also be in focus after a hawkish set of comments from ECB Pres Trichet late on Friday, pointing to inflation risks as being "on the upside." According to a Bank of America/Merrill Lynch report released on Friday, ECB rhetoric has turned notably more hawkish overall as evidenced by greater focus by a more neutral member Constancio, with the bias now shifting toward June as the next date for further tightening in the EU.

Looking ahead to the start of a busy earnings week in the US, Citi reports before market open on Monday followed by Texas Instruments afterhours. Goldman Sachs, IBM, Intel, and Yahoo are on tap for Tuesday.

By GG - AshrafLaidi.com Staff