Calendar Heats Up With RBA's Stevens

A blockbuster week of economic data heats up with Japanese employment, industrial production and a speech from the RBA Governor. On Monday, the yen was the top performer while the kiwi lagged after last week's rally.

US pending home sales were a lone highlight in a quiet day of trading that underscored the anticipation of the central bank decisions and data on the calendar later this week. Sales rose 9.1% y/y, falling short of the 11.5% expected.

The euro struggled to climb above 1.33 and then slipped back to 1.3239 before rebounding to the middle of the range. A story about the Bank of Italy closely inspecting the balance sheets of 8 banks may later prove important. The central bank loosely audited bank capital earlier in the year and ordered several banks to form larger buffers. The second look suggests they could have found some trouble or irregularities. Italian bad loans have risen for 27 consecutive months.

Turning to Japan, which has seen stock prices wipe out a month of gains in the past three days, the government appears to be taking a cautious tone on growth. Nikkei reports the FY2014 official growth forecast is 1%, that's about a half-point weaker than the consensus. The critical factor will be Abe's decision on the sales tax.

The next stage of moves in the FX market will be dictated by data. That begins with Japanese jobs at 2330 GMT and industrial production at 2350 GMT. The latter report is generally more of a market driver but the Nikkei will be key.

The other event to watch is a speech from RBA Governor Stevens at 0305 GMT. The OIS market is pricing in a hefty 77% of a rate cut next week and Stevens could wish to manage those expectations.