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    Asian Session – Yen firms on risk aversion and lack of action by G20

    The G20 meeting of world finance leaders failed to produce the coordinated action to combat the slowing global growth that some investors were hoping for. However, the G20 did release a statement saying they agreed “to adopt all policy tools – fiscal, monetary, structural – to counter risks, foster confidence and strengthen growth”. Meanwhile, China’s premier signalled over the weekend that China will intensify the use of fiscal policies.

    Asian equities were mostly negative on Monday as markets were in risk off mood. This helped the yen reverse Friday’s losses against the dollar and was further supported by encouraging industrial output data. Industrial production in Japan rose by 3.7% month-on-month in January, above estimates of 3.3%. Retail sales disappointed though, declining by 0.1% in the 12 months to January, falling short of expectations of 0.5% growth.

    The dollar slid below 113 yen to 112.90 yen in late Asian trading, having come close to hitting the 114 level on Friday. But it managed to advance against the euro on the back of strong economic data on Friday. The euro dipped below 1.10 dollars on Friday and hit a low of 1.0911 dollars on Monday before strengthening to 1.0943 dollars in late Asian session.

    An upward revision to fourth quarter GDP and stronger-than-expected consumer spending figures rounded up a relatively positive week for US economic indicators, raising expectations that the Fed is on track to raise rates further this year.

    It wasn’t such a good week for the pound though as Brexit fears continued to put pressure on the British currency. Sterling hit a fresh 7-year low of 1.3840 dollars today before recovering to around 1.3894 dollars later in the session.

    Oil prices were weaker on Monday despite data on Friday showing another drop in the US oil rig count. US crude futures rose above $34 a barrel on Friday but had slipped to around $32.70 a barrel on Monday.

    Looking ahead to the rest of the day, February flash inflation data for the Eurozone will be closely watched, as well as the Chicago PMI and pending home sales in the US.

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