The market is expecting a rate hike today in China or over the weekend at the very latest (it’s not unusual for China to adjust monetary policy over the weekend). Chinese CPI figures will be released on Monday and they are likely to show an increase in inflationary pressure of about 4.75% YoY. Anecdotal evidence suggests that the actual figures are significantly higher than this.
As its risk-off Friday anyway, the AUD/JPY pairing as the typical risk trade during this timezone, should trade with a moderately heavy tone. This is also likely to put some modest pressure on EUR/USD, if no other factors emerge.
Good luck today and TGIF.
