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Dollar, Yen Aiming Higher as Euro Crisis Fears Dent Risk Appetite

By , Currency Strategist
09 May 2012 05:55 GMT

Talking Points

  • Dollar, Yen Rise as Euro Crisis Fears Sink Shares in Asian Trade
  • S&P 500 Futures Down, Hinting Risk Aversion Likely to Continue
  • EFSF’s Regling, Bundesbank’s Weidmann Commentary in Focus

Another quiet day on the European economic data front puts the focus on scheduled remarks from EFSF chiefKlaus Regling and Bundesbank PresidentJens Weidmann as Eurozone crisis fears remain in the spotlight. With Greece failing to cobble together a ruling coalition able to push along its commitments under the terms of the EU/IMF bailout (at least so far), traders will be keen to see how much room the country’s creditors are prepared to give it.

On one hand, a hard line may force Greece out of the Euro area and possibly the EU altogether, an unprecedented move that falls largely outside the realm of the forecast-able in terms of its practical implications for financial markets. On the other, giving Athens too much room will encourage other bailout recipients to flout their obligations, putting into question the structural integrity of the EU’s crisis response framework in its entirety.

S&P 500 stock index futures are pointing sharply lower ahead of the opening bell in Europe, hinting risk aversion will continue to drive the safe-haven US Dollar and Japanese Yen higher against their leading counterparts. The two currencies added as much as 0.3 percent each against the majors overnight as Asian stocks slumped, with traders unnerved amid Eurozone-linked uncertainty. The sentiment-geared Australian Dollar led the way lower, down as much as 0.7 percent against its US namesake.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:01

GBP

BRC Sales Like-For-Like (YoY) (APR)

-3.3%

0.6%

1.3%

23:50

JPY

Official Reserve Assets ($) (APR)

1289.5B

-

1288.7B

5:00

JPY

Coincident Index (MAR P)

96.5

96.2

95.2 (R+)

5:00

JPY

Leading Index (MAR P)

96.6

96.9

96.0 (R-)

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German Current Account (€) (MAR)

18.0B

11.1B

Low

6:00

EUR

German Trade Balance (€) (MAR)

14.3B

14.7B

Low

6:00

EUR

German Exports s.a. (MoM) (MAR)

-0.50%

1.60%

Low

6:00

EUR

German Imports s.a. (MoM) (MAR)

1.00%

3.90%

Low

6:00

EUR

French Trade Balance (€) (MAR)

-6000M

-6398M

Low

9:30

EUR

Germany to Sell €5bn in 5-Year Bonds

-

-

Medium

11:00

EUR

EFSF’s Regling Speaks at Hearing on Euro Crisis

-

-

Medium

12:15

EUR

Bundesbank’s Weidmann Speaks on Euro Crisis

-

-

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2935

1.3053

GBPUSD

1.6087

1.6196

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

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09 May 2012 05:55 GMT