Analysis details (05:15)
- Concerns over the looming decision by Japanese government over planned sales tax rise also added to the cautious sentiment which prevailed overnight in Asia, where the Nikkei 225 index closed lower by over 2%.
- Of note, Japan LDP tax panel's Noda said the sales tax rise is inevitable. Of note this morning, Japan PM adviser Honda said that an extra spending needed if sales tax raised in April as sales tax hike could otherwise deal major blow to recovery.
- Higher spending in turn may pose another problem for both the BoJ and Abe, who not so long ago reiterated its pledge to adhere to halve its primary deficit by FY 2015.
- With JPY firmer across the board and USD also down as a result meant that risk averse flows supported CHF, with EUR/CHF tripping stops through 1.2300 to the downside earlier on in the session.
- Weaker USD ensured that in spite of the cautious sentiment, EUR/USD and GBP/USD traded higher as a result.
20 Aug 2013 - 03:18 - - Source: RANsquawk
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