Forex Today: Yen weakest in risk-on Asia, a Busy week ahead

The Japanese currency faced a double whammy in a quiet Asian session on Monday, as risk-on sentiment returned to markets, following optimistic Trump-Abe meeting and Trump backing China one policy last week. While on the other hand, weaker-than expected Japan’s Q4 prelim GDP estimate also crippled the yen, which emerged the biggest loser in Asia.

Broad based USD strength remained the main theme in Asia amid risk-on rally in the US treasury yields and Asian equities.

Later today, we have no major economic data releases from across the globe, except for the second-tier data in the German WPI numbers due out shortly. While the week ahead remains eventful, with the inflation reports from China, UK and US next on tap tomorrow, while Fed Yellen’s testimony scheduled on Tuesday and Wednesday will grab the eyeballs in the first half of this week.

Main topics in Asia

PBOC injects liquidity after 6-day gap

The People’s Bank of China (PBOC) added liquidity this Monday morning following a six-day drought.

Japan's Q4 2016 GDP a tad lower-than-expected

 Japanese GDP data for Q4 came slightly lower-than expected at 0.2% QoQ vs 0.3% exp and 0.3% last.

Nikkei clocks 4-1/2 week high

 The risk reset and the resulting weakness in the Japanese Yen pushed the Japan’s benchmark equity index Nikkei higher to 1-1/2 week high of 19,519 levels.

Copper jumps above monthly 50-MA, trades at 20-month high

Comex Copper breached monthly 50-MA $2.7754/pound earlier this month and clocked a 20-month high of $2.8157/pound. 

Key focus for the week ahead                                                  

EUR/USD: Bears eye a break below 1.0600 amid risk-on

Looking ahead, we have an eventful week in stored, with the US CPI and Fed Chair Yellen’s testimony likely to emerge main market drivers. In the meantime, the major will continue to remain at the mercy of Trumponomics-driven risk-trends and USD dynamics.

The Week Ahead - Nomura

Analysts at Nomura take us through a flurry of economic events from across the globe that will be reported in the week ahead, and will emerge the main drivers for the FX markets.

Watch the GBP0.8470 area for the euro - BBH

Analysts at Brown Brothers Harriman noted that Sterling was the best performing major currency last week, which entailed rising less than 0.2% against the rising dollar.  

UK CPI preview: Inflation expected to accelerate further in Jan - Natixis

Analysts at Natixis offer brief insights on what to expect from the UK CPI report for the month of January, which will be lined up for release tomorrow.