Gold gains amid falling risk sentiment

USDJPY continued to gain momentum as the dollar fell to an 18-month low against the yen in yesterday's trading. Knocking off the crucial 110Yen level, USDJPY fell 1.40% yesterday to close at 108.18Yen. Comments from Japan's chief cabinet minister, Suga fell on deaf ears as he said that the authorities were keeping a close eye on the exchange rate. Japan and the BoJ is caught in a corner as the general assumption has been not to intervene in the markets. However, the rapid appreciation in the yen has sent the Nikkei225 weaker and one of the worst performing indices this year. Economic data from Japan remains weak and a stronger yen is likely to hit exports even more.

UK's manufacturing and industrial production numbers are due for release today by the Office for National Statistics. Analysts forecast a contraction of 0.20% in manufacturing production on a month over month basis in February, while expecting to see a decline of 0.70% in the twelve months ending February. Industrial production data is also due with expectations for a flat print on an annualized basis, while month over month, UK's industrial production is expected to rise 0.10%, down from January's 0.30% increase. According to the manufacturing PMI released by Markit earlier, data showed a subdued pace of growth in the first quarter, adding to the downside risks for today's release. Even in the event of a surprise reading, the risks are in favor of weaker prints going forward as UK is now struggling as UK's steel manufacturer, Tata Steel is scaling down its operations, which most certainly is expected to hit the manufacturing sector.