My Thoughts

The comments from Fukui are the most explicit to date on the subject and showed that Japanese policy makers have become worried about the size of short yen positions and the associated risks. We think increased comments about yen weakness and carry trades will help provide more support for the weak currency going forward. And i'll talk about China's foreign reserve diversification is likely to keep supporting the yen.

The AUD failed to garner any significant encouragement from the RBA’s quarterly Monetary Policy Statement. They were hawkish enough about the risks of more tightening, but seemingly tied this to CPI data, so the market is left with the idea that the earliest a rate hike would be on the table is in early February after the late January release of Q4 CPI. This will leave the AUD vulnerable to further short-term corrective pressure – 0.7600-20 a possibility this week

The USD weakened on the broader market throughout all of last week. We are at major support levels in the USD against all majors. The GBP/USD is already through all major resistance and continuing higher. The EUR/USD is approaching major resistance between 1.2900-1.2950. The USD/JPY has minor support around 116.80. The important question is whether the USD sellers will press on Monday before the PPI release on Tuesday. Common sense says no, but that doesn't mean the sell off won't continue throughout Monday's session."