The Japanese Yen sank amid a recovery in risk appetite in Asia after Fed officials poured cold water on QE reduction expectations. More of the same is hinted ahead.
Talking Points
Japanese Yen Sinks as Fed Officials Talk Down QE Reduction Speculation
German CPI Increase May Boost Euro Amid Fading ECB Stimulus Hopes
S&P 500 Futures Point to Risk Appetite Well-Supported into Week-End
The Japanese Yen underperformed in overnight trade, down as much as 0.8 percent on average against its top counterparts, as swelling risk appetite buoyed demand for carry trades funded in the perennially low-yielding currency. The MSCI Asia Pacific regional benchmark stock index rose 2 percent as investors cheered on comments from New York Fed President Bill Dudley and Fed Governor Jerome Powell that poured cold water on stimulus reduction bets.
Dudley said QE may be prolonged as-is if the economy falls short of the central bank’s outlook, adding growth may “diverge significantly” from the FOMC forecast. Powell added that the timing for reducing asset purchases is “in no way” predetermined. Commodity prices likewise tracked higher as traders greeted the possibility that Fed support may not be withdrawn as quickly as previously expected. Cycle-sensitive crude oil prices followed shares higher while gold and silver edged higher as the prospect of longer-lasting QE stabilized anti-fiat demand.
S&P 500 futures are pointing firmly higher in early European trade, pointing to more of the same through the end of the trading week. The preliminary set of June’s German CPI figures headlines the economic calendar. Expectations suggest the headline inflation rate rose to 1.7 percent, a five-month high. The result may weigh on the probability for expanded ECB stimulus in the minds of investors and boost the Euro, where prices have been tracking closely in line with the front-end yield spread (a gauge of the markets’ monetary policy outlook). Comments from Fed Governor (and sitting FOMC member) Jeremy Stein headline the day’s speaking schedule.
Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index
Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
22:45
NZD
Building Permits (MoM) (MAY)
1.3%
-3.9%
21.0%
23:05
GBP
GfK Consumer Confidence Survey (JUN)
-21
-21
-22
23:15
JPY
Nomura/JMMA Manufacturing PMI (JUN)
52.3
–
51.5
23:30
JPY
National CPI (YoY) (MAY)
-0.3%
-0.4%
-0.7%
23:30
JPY
National CPI Ex-Fresh Food (YoY) (MAY)
0.0%
0.0%
-0.4%
23:30
JPY
National CPI Ex Food, Energy (YoY) (MAY)
-0.4%
-0.3%
-0.6%
23:30
JPY
Household Spending (YoY) (MAY)
-1.6%
1.3%
1.5%
23:30
JPY
Jobless Rate (MAY)
4.1%
4.0%
4.1%
23:30
JPY
Job-To-Applicant Ratio (MAY)
0.9
0.9
0.89
23:30
JPY
Tokyo CPI (YoY) (JUN)
0.0%
0.1%
-0.2%
23:30
JPY
Tokyo CPI Ex-Fresh Food (YoY) (JUN)
0.2%
0.2%
0.1%
23:30
JPY
Tokyo CPI Ex Food, Energy (YoY) (JUN)
-0.4%
-0.3%
-0.3%
23:50
JPY
Industrial Production (MoM) (MAY P)
2.0%
0.2%
0.9%
23:50
JPY
Industrial Production (YoY) (MAY P)
-1.0%
-2.4%
-3.4%
23:50
JPY
Large Retailers’ Sales (MAY)
-0.4%
0.2%
-2.3%
23:50
JPY
Retail Trade s.a. (MoM) (MAY)
1.5%
0.7%
0.6%
23:50
JPY
Retail Trade (YoY) (MAY)
0.8%
0.0%
-0.2%
1:30
AUD
Private Sector Credit (MoM) (MAY)
0.3%
0.3%
0.3%
1:30
AUD
Private Sector Credit (YoY) (MAY)
3.0%
2.9%
3.1%
1:35
CNY
MNI Flash Business Sentiment Indicator (JUN)
53.7
–
56.7
3:00
NZD
Money Supply M3 (YoY) (MAY)
6.2%
–
6.5%
4:00
JPY
Vehicle Production (YoY) (MAY)
-6.2%
–
-6.5%
5:00
JPY
Housing Starts (YoY) (MAY)
14.5%
6.1%
5.8%
5:00
JPY
Annualized Housing Starts (MAY)
1.027M
0.950M
0.939M
5:00
JPY
Construction Orders (YoY) (MAY)
26.0%
–
2.0%
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
6:00
EUR
German Retail Sales (YoY)
0.4% (A)
2.7%
Medium
6:00
EUR
German Retail Sales (MoM)
0.8% (A)
-0.1%
Medium
6:00
GBP
Nationwide House Prices s.a. (MoM)
0.3% (A)
0.4%
Medium
6:00
GBP
Nationwide House Prices n.s.a. (YoY)
1.9% (A)
1.1%
Medium
7:00
CHF
KOF Swiss Leading Indicator
1.16 (A)
1.1
Medium
8:30
GBP
Index of Services (MoM)
0.1%
0.2%
Low
8:30
GBP
Index of Services (3Mo3M)
1.1%
0.6%
Low
12:00
EUR
German CPI (MoM) (JUN P)
0.0%
0.4%
High
12:00
EUR
German CPI (YoY) (JUN P)
1.7%
1.5%
High
12:00
EUR
German CPI – EU Harmonised (MoM) (JUN P)
0.1%
0.3%
Low
12:00
EUR
German CPI – EU Harmonised (YoY) (JUN P)
1.8%
1.6%
Low
Critical Levels:
CCY
SUPPORT
RESISTANCE
EURUSD
1.3006
1.3089
GBPUSD
1.5192
1.5336
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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Source: Daily fx