The Japanese Yen rose amid risk aversion as Asian markets followed Wall Street lower on Syria-linked risk aversion. The Euro may rise on Augusts’ German IFO data.
Talking Points
Yen Rallies, Aussie and NZ Dollars Sink on Syria-Linked Jitters Spark Risk Aversion
Euro May Rise as German IFO Gauge Hits 6-Month High, Denting ECB Easing Bets
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The Japanese Yen outperformed while the sentiment-linked Australian and New Zealand Dollars fell as Asian stocks followed Wall Street lower overnight. The MSCI Asia Pacific regional benchmark equity index fell 0.7 percent. The newswires attributed the flare-up of risk aversion to swelling geopolitical risk after US Secretary of State John Kerry said the Syrian government will be held accountable for its use of chemical weapons. The prospect of direct US involvement in Syria’s bloody civil conflict appears to have stoked concerns about spillover into wider regional turmoil, unnerving investors.
Germany’s IFO Survey of business confidence is in focus in European trading hours. Expectations suggest the headline Business Climate gauge rose to a six-month high in August. News-flow out of the currency bloc has increasingly outperformed relative to expectations over recent months (according to data compiled by Citigroup), opening the door for an upside surprise. The Euro continues to track the relative monetary policy outlook (as implied by the front-end bond yield spread), hinting a supportive IFO print that weighs against the probability of further ECB easing is likely to boost the single currency.
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Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
1:30
CNY
Industrial Profits YTD (YoY) (JUL)
11.1%
–
11.1%
5:00
JPY
Small Business Confidence (AUG)
49.7
–
49.4
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
8:00
EUR
German IFO – Business Climate (AUG)
107.0
106.2
High
8:00
EUR
German IFO – Current Assessment (AUG)
111.0
110.1
High
8:00
EUR
German IFO – Expectations (AUG)
103.1
102.4
High
Critical Levels:
CCY
SUPP 3
SUPP 2
SUPP 1
Pivot Point
RES 1
RES 2
RES 3
EURUSD
1.3297
1.3335
1.3352
1.3373
1.3390
1.3411
1.3449
GBPUSD
1.5472
1.5527
1.5552
1.5582
1.5607
1.5637
1.5692
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, email ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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