Intraday Market Thoughts

Asia Rallies on PBOC Cut, Japan Deficit Hits Record

by Adam Button
Feb 20, 2012 1:47

Asia rallies after China's weekend RRR cut. The focus remains on Greece and the euro but the market mover all week has been the yen. On Friday, it lagged once again while GBP and EUR led. Fridays CFTC data showed euro shorts growing once again. Japans trade deficit hits new record as exports posted 4 straight monthly declines. Latest Premium trades below.

Asian markets rally after China's PBOC cut in its reserve rate requirement by 50 bps to 20.5%, making it the first cut of the year.

Japans Jan trade deficit hits new record at Yen 1.475 trillion as exports fell 9% y/y, 4 months in a row.

Sth Korean Military said will hold live-fire drills near South Korea's western border islands today, despite North Korea's threat of retaliation, MNI quoting news from Yonhap News reports.

EUR/USD pushed toward 1.32 again on Friday but was unable to break the mark and drifted back to 1.3160 at the close. News from Greece was mixed. The ECB has reportedly completed its debt swap but other European central banks will not be given the same deal. A report from Reuters suggested a 50-50 chance they will be given the same deal as private creditors.

Schaeuble appeared to soften his stance on the need for a 120% debt-to-GDP target for Greece, saying it could be 2-3 percentage points higher. Juncker, however, raised fresh concerns saying they are far away from 120%.

The more tradable story continues to be the yens slide. USD/JPY touched above the October post-intervention low of 79.52 on Friday at the end of trading, suggesting that further gains are likely. In comments Friday, Shirikawa said policy should remain loose.

Friday's CFTC data showed EUR shorts climbing to 148K from 140K. It was the first gain after two weeks of declines. Yen longs were battered, falling to +29K from +55K. Canadian dollar longs climbed to the highest since August as oil rallied to a 9-month high.

The latest Premium Intermarket Insights focus on oil and the euro & S&P500 mini, while maintaining existing trades on USDCAD, AUDNZD and gold. To go directly to the piece, click here: Nonsubscribers can click here


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