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The dollar and Asian trade

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  • Japan saw its 5 year government bond yield touch 0% today – a proud moment for any nation and a testament to the credibility of Abenomics and its 2% inflation target. The low oil price and the weaker yen did help boost the current account surplus, however.
  • China's exports were stronger in December on US demand. Weaker exports to Europe need to be interpreted with care - the weaker Euro will lower the dollar value of Chinese exports to Europe, without necessarily impacting the volume of Chinese exports to Europe.
  • UK BRC like for like retail sales slowed-0.4% yoy in December, paying back for a strong November and perhaps reflecting price discounting. The release of consumer and retail price data today will help understand the latter force.
  • US small business sentiment is due from the NFIB, having hit a cyclical high last month. The data has quality issues, as participants understand the survey's value as a lobbying tool, but small business employment data is critical to the pace of US recovery this year.

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