This in turn weighed on the markets with a significant flow of funds moving back into US assets on the demand for safe haven assets. For now it appears as though this trend will persist into the coming week and we would recommend that local investors take to the sidelines so long as the global economic outlook remains unstable.
The Yen has been a hot topic of late with the single currency rallying in the previous week to fresh multi-year highs against the buck and showing no real sign of let up just yet. This has brought on some serious concern from government officials and central bankers in Japan who realize the negative impact and strain the appreciation in their currency is having on the local economy. While there has been no official government intervention to this point, any additional appreciation in the Yen could very well spark some form of action from the Bank of Japan. The latest GDP figures have come out on Monday and are extremely discouraging after the data was well below expectation. This could help to take some of the bid tone out of the Yen, but at this point it is too early to tell.
The economic calendar in the week ahead is mostly centered on US data releases, with NAHB housing due on Monday along with empire manufacturing and TICs data. Housing starts and building permits are then out on Tuesday, along with PPI,industrial production, and capacity utilization. Thursday then sees the weekly initial jobless claims and initial jobless claims data, along with the Philly Fed indexand leading indicators. In the Eurozone, inflation data is set for release on Monday, with the German ZEW following on Tuesday. Meanwhile in the UK, inflation data is due out on Tuesday, while Bank of England minutes are set for release on Wednesday, with retail sales capping things off in Thursday trade. The only other key event risk worth noting are the RBA minutes due out early Tuesday.
Written by Joel Kruger
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