Forex: Daily outlook: Abenomics endorsed in Japan’s upper house elections

on Jul 22, 2013
Listen Monday July 22nd_:

The euro will not today be influenced by fundamental releases from the Eurozone, there being none on the schedule.
The Eurozone’s most significant economic news from the past week:
– The German ZEW Economic Sentiment Index – a drop to 36.3 points in July from the prior 38.5 points;
– The Eurozone’s trade balance for May – a fall to €14.6 billion from the previous reading of €15.2 billion, revised down from €16.1 billion;

– The Eurozone’s May current account – a decline to €19.6 billion in surplus from the prior €23.8 billion, revised up from €19.5 billion.
From the United States the Chicago Fed National Activity Index for June is due out at 13.30 BST today. Analysts expect zero percent change, after May’s reading of -0.3. The index measures overall economic activity and related inflationary pressure.

A report on US existing home sales for June is scheduled for release at 15.00 BST today, with expectations of a rise by 0.5 percent to 5.27 million from the prior 5.18 million (annualized numbers).
Data on three- and six-month bond auctions to be conducted by the US Department of Treasury tomorrow will be announced at 16.30 BST today.
There are no economic releases due out of the UK today, indicating a probably quiet day for sterling.

Last week saw reports on the June CPI y/y (2.9 percent increase, compared to the prior 2.7 percent rise), June unemployment claimant count change (a drop of 21,200), the Bank of England Monetary Policy Committee bank rate decision (no change at 0.50 percent).
Prime Minister Shinzo Abe’s coalition government has gained a controlling position in Japan’s upper house of Parliament, according to exit polls during the mid-term elections held yesterday. This gives Abe control of both houses, ending years of legislative stalemate, and will likely see extensions to Abenomics, which Japanese electors have seemingly endorsed.

Bank of Japan Policy Board member Takehiro Sato addressed business leaders in Fukushima at 03.00 BST today. Sato said that the central bank would add to stimulus measures if unexpected risks to the economy emerge. He described the economic slowdown in China as disturbing, but expressed the view that it won’t be a big obstacle to Japan’s economic recovery.
The NIKKEI 225 index closed 0.47 percent up today.
As elsewhere, little of significance is expected from Australia today, meaning the pair will likely be influenced mostly by US data.
Last week the CB Australia Leading Index m/m for May came out as zero percent change and the June NAB Quarterly Business Confidence Index was reported as a fall to -1 from the prior period’s + 2).
As with Australia, so with Canada – nothing of consequence on the economic calendar today.
Out of Canada last week:
– May manufacturing sales m/m were 0.7 percent up;
– The overnight rate was kept at one percent; and
– Core CPI m/m for June came out as a 0.2 percent fall.
The Swiss National Bank released its July monthly statistical bulletin a short time ago, updating key domestic and international economic data and the most important banking statistics from the SNB surveys. Further details to follow but for now, the M3 money supply was up 11.6 percent in June, a sizeable turnaround from May’s contraction of 9.7 percent.