Daily Forex News May 13th 2013

The Japanese Yen edged lower as the week starts as the G7 meeting over the weekend signaled acceptance over the depreciation of Japanese currency, even though financial ministers pledged to monitor the Bank Of Japan's policies and the impact of the yen's weakness on other currencies. German Finance Minister Wolfgang Schaeuble noted there was "a very intense discussion about Japan with our Japanese colleagues" while the UK's Chancellor of the Exchequer George Osborne stated that G-7 leaders pledged not to manipulate currencies and said Japan's policies "impressed" delegates. Bank of Japan Governor Kuroda reaffirmed the stance to meeting a 2% inflation target by 2015 thorough aggressive asset purchases as "easing will contribute to achieving our domestic objective of ending nearly 15 years of deflation" while Finance Minister Taro Aso said there was not "any opinion" on the yen's decline. The US Dollar retreats mildly as markets digest last week's broad based rally. There has been increasing talk that the Fed will exit from stimulus earlier than markets have priced in. And this would remain a factor supporting the greenback. Also with major stock markets expecting to continue to make new record highs, funds are expected to flow back from bonds, commodities, and yen back into the US and Europe. The US dollar will have an upper hand for strength in the DOW and S&P 500. In a speech at a Chicago Fed banking conference, Chairman Ben Bernanke stated that "one of the key risks is how the system would respond to the failure of a broker-dealer or other major borrower". He also stated that "more work is needed to better prepare investors and other market participants to deal with the potential consequences of a default by a large participant in the repo market" and "possibility of a run" on money-market funds remains. In the Eurozone, European Central Bank president Mario Draghi said that the central bank is looking at a "variety of things" to boost lending to Small and medium enterprises and buying asset-backed securities is an option. But he noted that the ECB don't have a position on that yet. Meanwhile, German Finance Minister Schaeuble expressed his opposition and said the ECB purchase of ABS would infringe European rules. On the data front, Australian home loans rose more than expected by 5.2% in March and the National Australian Bank�s business confidence deteriorated to -2 in April. Chinese industrial production rose less than expected by 9.3% year on year in April, fixed asset investment rose 20.6% year on year and retail sales rose 12.8% year on year. The Main focus today is on US retail sales which are expected to drop 0.3% in April with ex-auto sales down 0.2%.