Friday 19 January.

During the overnight Asian session, CPI data from Japan was reported lower than expected, which backs up the recent JPY short 'interest rate differential' trade. Although the CPI release was subsequently followed by the finance minister commenting that the BOJ are watching currency moves closely, and so the verbal 'jawboning' begins again. And the 'risk' to any JPY trade today would be traders reluctance to short the yen before next Tuesdays interest rate meeting. Which I think is a big possibility, especially as it's Friday.

In other news, the recovery in the S&P bodes well, especially as the US 10YEAR is still above 4%. indicating 'the market' is comfortable with the general state of play at the moment. Which could bring AUD and NZD longs back into play Vs the JPY next week (if the BOJ meeting passes by without any action taken).

During today's European session, the UK continues it's run of mixed data (one good, one bad) with poor retail sales. Which inevitably induced talk of earlier rate cuts, but I have read that the reading was an anomaly and growth will likely pick up next month. So I'd be reluctant to short the GBP for the time being (especially whilst the S&P is going up).

During the US session we have retail sales from Canada and consumer sentiment and 5 year inflation expectations from the US, which could spark some volitility. But for now, I expect that it may be prudent to sit on the sidelines today and possibly even await the outcome of the BOJ meeting.

Feel free to email any questions or comments, I'll try my best to reply before the end of the weekend.

johnelfedforexblog@gmail.com