Carney Warns on UK Housing

Several central bank officials spoke on the weekend and that could drive early moves. Last week the yen was the top performer while the Swiss franc lagged; it was the second week of that pattern. The new session begins with Japanese machine orders and UK house prices.

BOE Governor Mark Carney spoke with Sky News on the weekend and lamented the state of UK housing. He's worried about higher prices and the lack of supply. The BOE appears to be laser focused on housing and less worried about inflation, that suggests action will be targeted with rates staying low.

The ECB's Coeure talked about the possibility of 15 bps‎ rate cuts. The big question traders are wrestling with is whether or not cuts are fully priced in.

The final bit of central bank news was from Bernanke, who is on the talking circuit. Reuters spoke with those who have attended the private dinners and they left with the impression that rates will remain low for years.

Up next, at 2301 GMT, Rightmove releases its latest numbers on UK house prices. The BOE is expected to introduce some kind of housing curbs in June and a build on the 7.3% y/y price rise in April could give them extra incentive.

At 2350 GMT, the focus shifts to Japan for March machine orders. They're expected to rise 5.8% in the month after an 8.8% decline in February. The risks for yen traders on this release are low.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

• EUR -2K vs +32.5K prior
• JPY -65K vs -61K prior
• GBP +32K vs +41K prior
• AUD +17K vs +8K prior
• CAD -26K vs -32K prior
• CHF +7K vs +13K prior
• NZD +19K vs +21K prior

We've been monitoring yen positions closely and it's a surprise to see shorts expanding at a time when the yen is strengthening.