Markets mostly trod water during the Asia session as the absence of news headlines and G10 economic data releases provided no incentive to participate. It was Japan’s first day back after the holiday season, but activity is still well below typical daily levels. The FOMC minutes from the December meeting confirmed that several members are still uncomfortable with the current pledge to keep rates unchanged until mid-2013. This should not come as any surprise given three dissenting votes were cast when the policy language was first adopted. Of greater interest were plans to change the Fed’s communication strategy. This strategy has been in flux for over a year now and, as a result, the Fed Chairman now gives post-meeting press conferences four times per year. Continue reading →

Risk currencies got off to a good start overnight with most of Asia returning from the holiday season. A strong non-manufacturing China PMI helped to keep risk sentiment supported, although the rise in FX was already underway. This latest data print complements China’s manufacturing PMI released over the weekend which was also surprisingly firm. AUD, the chief beneficiary, briefly touched 1.0300 having spent the past three weeks trading below, and NZD is firmly back above 0.78. EURUSD also reached higher ground, trading in a range of 1.2922-1.2989. Continue reading →