In such a febrile environment local Asian economic indicators and events are likely to take a back seat. Monday’s calendar is pretty light, with only Indian trade and wholesale price inflation data, and Japanese machinery orders on tap.
China’s first-quarter GDP on Tuesday and Japanese consumer price inflation figures on Friday are the two economic indicators from Asia that could most move local markets this week.
But for Monday at least, investors will be focused on reducing risk and playing it safe, and in that regard, there could be some big movement in the Japanese yen.
The yen is traditionally seen as a ‘safe-haven’ asset that does well in times of heightened risk aversion, boosted by large repatriation flows from Japanese investors and short covering from currency traders using the yen to fund carry trades.
And there is a large short position to cover – the yen is at a 34-year low below 153.00 per dollar and the latest U.S. futures market data show hedge funds’ net short yen position is the biggest in 17 years.
