As we mentioned yesterday, the fact that pertinent and concrete economic data has taken a holiday (alongside everyone else) has allowed triviality and speculation to run amuck in the markets. Today's culprits seem to be print articles coming out of both Japan and Germany.

The Japanese newspaper Sankei reported that the BoJ is considering expanding their injections of liquidity through new funds-supplying operations which began last December. This is nothing really new for the Yen and should continue to have a muted effect; the only newsworthy idea in the article is that the expansion of liquidity is occurring later than many participants had initially thought. Within Forex the news cause a small bounce in the USDJPY, but we know that if Japanese policy makers are truly looking to back down the Yen, bolder steps are required.

Also in Japan, rumors were spreading throughout trading floors that an emergency meeting was to be held today concerning the Yen, but the BoJ quickly quashed the claims. The scheduled meeting between Prime Minister Kan and BoJ Governor Shiwakawa will take place early next week. We are selling the USDJPY off at the 85.30 level in anticipation that the BOJ will come up with a strong response sooner than the market expects.

The second article causing a buzz today is from the German magazine Spiegel. The piece suggested that the Greeks have gone too far in appeasing the IMF & the market's desire for austerity. As we stated in the beginning of the summer, there was always a concern that deep cuts in Greece would drag the economy into a negative death spiral. It now appears to be coming true as growth and employment figures continue to come out overly weak in the troubled state.

Greek / German 10 yr spreads hit a 3 month high on the back of this article. There is now speculation that Greece's fundamentals have crossed the event horizon and reversing course now won't be as easy as slashing-n-burning austerity measures. To turn the tide in Greece, some ultra-loose spending should be considered.

Today' UK Retail Sales printed much higher than the market anticipated, coming in at 1.1% m/m verse the widely expected 0.3%. With yesterday's minutes projecting a very balanced BoE tone, Andrew Sentance's strong appeals may pick up a few supporters if UK fundamentals hold up. Any shift towards tightening and away from quantitative easing will give the GBP a solid boost - especially against the embattled Euro.

The US will be releasing some light data today which all together should be a non-event. We suspect hot/cold, on/off risk sentiment to continue and we'll be looking to trade the ranges across various markets. Start fading risk-averse trades this afternoon.

Forex-Chart

Today's Key Issues (time in GMT):
08:00 NOK GDP p 0.4 exp, 0.1 prior
08:30 GBP Money Supply
08:30 GBP PS Net Brwing
08:30 GBP PSNCR
08:30 GBP Retail m/m y/y 0.3 (0.6) exp, 0.7 (1.3) prior
09:00 CHF ZEW
10:00 GBP CBI Orders
12:30 USD Initial jobless claims, thous 484 (474) prior
14:00 USD Philly Fed 7.5 exp, 5.1 prior
14:00 USD Leading indicators 0.1 exp, -0.2 prior
16:00 Turkey: Interest rate announcement, % 7.0% exp/prior
16:30 USD St. Louis Fed President Bullard (FOMC voter) speaks
17:00 USD Chicago Fed President Evans (FOMC non-voter) speaks