Intraday Market Thoughts

Japan Readies the Pumps, Leaks Galore

by Adam Button
Apr 3, 2016 23:00

It's not a later April Fool's joke, but the Japanese government is preparing another round of stimulus, according to a weekend report. Early-week trading is light as the market digests two major leaks. The Canadian dollar is the laggard so far as CFTC data shows positions near square. Key Aussie data is next (see below). In the Premium Insights, Ashraf closed the GBPCAD short at 1.8505 for a 195-pip gain 1 day after closing the EURUSD long at for an 188-pip gain at 1.1378. There are 6 Premium Trades in progress.

Click To Enlarge
Japan Readies the Pumps, Leaks Galore - Oil Apr 3 (Chart 1)

The economic malaise in Japan was underscored by last week's soft Q1 Tankan. The vice president of the ruling Liberal Democratic Party of Japan said on the weekend that new measures will be needed to boost consumer spending later this year.

At this point, it's impossible to imagine anything jolting the heartbeat of the Japanese economy. The government and central bank have tried countless programs that have all failed to do anything but drive up debt. If stimulus is in tandem with more BOJ moves, however, it could drive the yen back down.

Oil may be an early week focus. The latest numbers from Russia showed slightly higher oil output in March and a 10% rise in exports. A separate story from Reuters caught our eye. It outlined how bankrupt oil companies have largely continued to produce.

Oil fell on Friday on signs Saudi Arabia wouldn't join the oil production freeze but even if they do, the market remains flooded.

Other weekend news included two major leaks. The first detailed IMF conversations on Greece where they revealed plans to strong-arm Germany into accepting debt relief on the threat of the IMF quitting the bailout.

A separate leak is just emerging and dubbed the Panama Papers. It includes millions of documents on shell companies and hidden assets that's said to snare 140 politicians. Along with the Monaco revelations on oil industry bribes, it's been quite a week for corporates and politics but so far there's nothing that threatens to reshuffled the deck in a way that threatens FX.

What threatens AUD early in the week is the 0100 GMT release of the Melbourne Institute inflation estimate and Feb retail sales 30 minutes later. The consensus on the latter is another 0.4% rise following the +0.3% reading last week. Rate cut talk continues but the Aussie economy continues to cruise.

Commitments of Traders

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

EUR -64K vs -66K prior JPY +54K vs +53K prior GBP -40K vs -38K prior CHF +5K vs +4K prior AUD +23K vs +18K prior CAD -6K vs -15K prior NZD +2K vs +1K prior

Bets against the Canadian dollar dropped sharply, reaching their lowest since June. At the beginning of Feb, the CAD position was a net -65K. You get the feeling that once all the Canadian dollar shorts are finally cleared it, the drop will resume.

Act Exp Prev GMT
Retail Sales (FEB) (m/m)
0.4% 0.3% Apr 04 1:30

Latest IMTs