Risk aversion dominates the market today, following sharp decline in Asia and European equity markets. US markets is closed for Martin Luther King day today. Activities may slow a bit but overall sentiments will likely remain unchanged. That is, yen will continue to be firm while other major currencies except the dollar will likely remain weak. Particular weakness will be in the Aussie, which was additionally pressured by weakness in gold prices. Euro, on the other hand will continue to be soft as markets readjusting their expectation on ECB policy path following recent dovish comments from ECB officials.

On the Economic data front, Germany PPI dropped -0.1% mom in Dec, with yoy rate unchanged at 2.5%. Swiss combined PPI dropped -0.1% mom in Dec, with yoy rate unchanged at 3.0% too. Canadian wholesale sales rose 0.3% mom in Nov, missing expectation of 0.5%. Released in Asia, Australia PPI missed expectation and rose 0.6% qoq, w.8% yoy only in Q4.

Two central banks are scheduled to announce rate decisions tomorrow. BoJ is widely expected to announce that they'll leave rates unchanged at 0.5% in the coming Asia session. BoC, on the other hand, is expected to cut rates by 25bps for the second consecutive months to 4.0%. ....Read more....