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Dollar, Yen Sink as Spain Secures Bailout and Chinese Exports Rise

By , Currency Strategist
11 June 2012 06:05 GMT

Talking Points

  • Spain Secures 100 Billion EU Bailout to Recapitalize Banking Sector
  • Chinese Exports Unexpectedly Accelerate, Denting Slowdown Fears
  • Dollar, Yen Vulnerable as S&P 500 Futures Point to Risk-On Mood

The US Dollar and Japanese Yen began the week sharply lower amid a broad-based recovery in risk appetite that sapped demand for the go-to haven currencies. The MSCI Asia Pacific regional benchmark equity index rose 1.9 percent, lifted by news that Spain successfully lobbied for a €100 billion EU aid package to recapitalize its banking sector.

The announcement downgrades the possibility of a credit squeeze in the event that a Spanish lender folded. The apparent absence of added austerity measures attached to the terms of the bailout reinforced the risk-on mood, hinting it will not compound Spain’s already deep recession and contribute to Eurozone-linked headwinds battering global output at large.

A supportive set of Chinese Trade Balance figures likewise amplified chipper sentiment trends, showing exports grew at the fastest pace in three months. The outcome hinted that the world’s second-largest economy and its top exporter may not be facing as deep of a demand slump as has been feared at the hands of the Eurozone recession.

Looking ahead, S&P 500 stock index futures are pointing firmly higher, hinting haven currencies will likely remain under pressure against their major counterparts. The economic calendar is relatively uneventful in Europe and empty in US hours, suggesting that little stands to disrupt established momentum in the near term (at least as far as scheduled event risk is concerned).

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

6/9 1:30

CNY

Consumer Price Index (YoY) (MAY)

3.0%

3.2%

3.4%

6/9 1:30

CNY

Producer Price Index (YoY) (MAY)

-1.4%

-1.1%

-0.7%

6/9 5:00

CNY

Industrial Production YTD (YoY) (MAY)

10.7%

10.8%

11.0%

6/9 5:00

CNY

Industrial Production (YoY) (MAY)

9.6%

9.8%

9.3%

6/9 5:00

CNY

Fixed Assets Inv Excl Rural YTD (YoY) (MAY)

20.1%

20.0%

20.2%

6/9 5:00

CNY

Retail Sales YTD (YoY) (MAY)

14.5%

14.6%

14.7%

6/9 5:00

CNY

Retail Sales (YoY) (MAY)

13.8%

14.2%

14.1%

2:55

CNY

Exports (YoY) (MAY)

15.3%

7.1%

4.9%

2:55

CNY

Imports (YoY) (MAY)

12.7%

5.5%

0.3%

3:00

CNY

Trade Balance ($) (MAY)

18.70B

16.25B

18.43B

22:45

NZD

Manufacturing Activity (1Q)

-1.8%

-

0.9% (R-)

22:45

NZD

Manufacturing Activity Volume s.a. (QoQ) (1Q)

0.7%

-

1.3%

23:01

GBP

Lloyds Employment Confidence (MAY)

-59

-

-59

23:50

JPY

BSI Large All Industry (QoQ) (2Q)

-3.1

-

-2.7

23:50

JPY

BSI Large Manufacturing (QoQ) (2Q)

-5.7

-

-7.3

23:50

JPY

Japan Money Stock M2 (YoY) (MAY)

2.1%

2.5%

2.6%

23:50

JPY

Japan Money Stock M3 (YoY) (MAY)

1.9%

2.2%

2.3%

5:00

JPY

Consumer Confidence (MAY)

40.7

39.8

40.0

6:00

JPY

Machine Tool Orders (YoY) (MAY P)

-2.9%

-

0.4%

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:45

EUR

French Industrial Production (YoY)

-0.3%

-0.9%

Low

6:45

EUR

French Manufacturing Production (YoY)

-0.9%

-0.3%

Low

6:45

EUR

French Manufacturing Production (MoM)

-0.7%

1.4%

Low

6:45

EUR

French Industrial Production (MoM)

-0.1%

-0.9%

Low

8:00

EUR

Italian Gross Domestic Product (QoQ)

-0.8%

-0.8%

Low

8:00

EUR

Italian Gross Domestic Product (YoY)

-1.3%

-1.3%

Low

9:30

EUR

Germany to Sell €4B in 6-mo Bills

-

-

Median

13:00

EUR

France to Sell €7.8B in 91-, 168- and 350-day Bills

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2444

1.2787

GBPUSD

1.5406

1.5605

--- 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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11 June 2012 06:05 GMT