Equity markets – Asia gains despite profit taking on Wall Street

A week started in a relatively light mode without key data releases and (thankfully) without more shocking news from either Africa/M.East or Japan. US investors took profits yesterday at the end of the cash trading, yet a decline was moderate and didn’t change a broader picture which remains positive.

Despite those declines equities were mostly up in Asia, confirming a rebound in sentiment. The Japanese data – with a noticeable drop in the unemployment rate to a 2-year low of 4,6% - confirmed a revival in a pre-quake Japan, yet have a little value under present circumstances.  

USDJPY – on the line (as well…)

Yesterday we pointed at the EURUSD trying to defend a trend line and so far euro-bulls have succeeded. A similarly interesting technical picture might be observing on the USDJPY. After tumbling to all-time low and recovering on the G7 intervention the pair got stuck around 81 and subsequently rose to 81,70. Not accidentally – the bulls were stopped by the same line which previously served as a support (lower limit of the triangle formation) – a break of which caused such a dramatic decline.  

In both cases (that is USDJPY as well as EURUSD) a similar factor might be decisive. If the US labor market data can fuel up expectations on a sooner (than currently expected) tightening in the US, the dollar might gain opening a gate for further advances on the USDJPY.

Events to watch – Conference Board, figures from UK

Conference Board (US) sentiment index is the key figure today (10.00 ET, 16.00 CET, consensus 65 pts.). The index recorded a 3-year high last month (at 70,4 pts.) but this time a consensus sees a decline on higher gasoline prices. The UM sentiment index already pointed to such a response from consumers.

In Europe, there are two releases from the UK at 4.30 ET (10.30 CET) – final q4 GDP (consensus for no revision, preliminary release was at -0,6% q/q) and the current account (expected at -10,3 bln GDP).      

Przemysław Kwiecień PhD, Chief Economist

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