Asian Markets Broadly Higher Following U.S, Aussie Lower On Retail Sales

Asian markets opened generally higher today in response to the positive U.S. job market data. Major indices maintained gains at the time of writing, except for some weakness in the Nikkei. In the forex markets, the yen remains soft in general with its crosses hovering near to last week's highs but with the exception of GBP/JPY. The yen crosses are still limited below recent key resistance, including 99.94in USD/JPY, 131.12 in EUR/JPY and 98.87 in CAD/JPY. The dollar is stuck in range against both European majors and commodity currencies.

The Aussie is a touch weaker against the greenback after retail sales unexpectedly dropped -0.4% mom in March, versus expectations of 0.2%. RBA rate decision on Tuesday will be a focus this week, and it's widely expected that the central bank would keep rates unchanged at 3.00%. There has been increasing talk of a rate cut from RBA in Q2 on weak growth prospects and contained inflation outlook. Policymakers would possibly argue that earlier rate cuts are still working through the economy. While the unemployment rate continued to climb, it's staying below RBA's forecast so far. The central bank could possibly wait for Q1 GDP figure before acting.

Another focus this week is the BoE meeting. It's expected that BoE will keep rates unchanged at 0.50%, and keep the target of the asset purchase program at GBP 375b too. Three policy makers had voted for expansion of the quantitative easing program in prior meetings. But recently released Q1 GDP data showed 0.3% growth. The U.K. has basically avoided a technical triple dip recession. Last week's PMI data was generally positive, with an upside surprise. It should be noted that manufacturing PMI, at 49.8, is quite close to the breakeven mark already. BoE rate decision would likely be a non-event and the more important event would be next week's quarterly inflation report on May 15.

Over the weekend, SNB vice president Danthine said that "the franc is still highly valued", and the central bank "can't allow a tightening of monetary conditions". He noted that it's instead "rather a question whether to be a bit more expansive.” He said that “as the economic situation improves only very slowly, especially in the euro area, a change of course in monetary policy in the short term is highly unlikely." That suggests the SNB would continue to maintain the EUR/CHF 1.2 floor.

Looking ahead at today's data:the Eurozone PMI services final, Sentix investor confidence and retail sales will be released. The key factor for the euro, though, would be any comments from EB officials regarding negative deposit rates. Canadian building permits and Ivey PMI will be released in the U.S. session.

Latest CFTC data showed that net positions were relatively unchanged on April 30, compared to April 23. Euro net short was relatively unchanged at -30.1k comparing to -34.3k. Yen net short dropped to -71.1k, from -79.7k. Sterling net short was also rather unchanged at -58.6k compared to -60.1k. Canadian dollar net short was unchanged at -67.8k, compared to -71.7k. Australia net long was relatively unchanged at 30.2k, compared to 31.3k.