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US Dollar, Yen Soar as Market-Wide Risk Aversion Accelerates

By , Currency Strategist
15 April 2013 11:15 GMT

The US Dollar and Japanese Yen are reclaiming outright safe-haven status, soaring against the majors as broad-based risk aversion grips financial markets.

Talking Points

  • US Dollar, Yen Rise as Risk Aversion Grips Financial Markets
  • S&P 500 Index Futures Hint Sentiment to Stay Under Pressure
  • US Empire Manufacturing Data, Citigroup Q1 Earnings on Tap

The US Dollar and Japanese Yen outperformed in overnight trade as broad-based risk aversion carried forward from Friday. Not surprisingly, higher-yielding and cycle-sensitive Australian, Canadian and New Zealand Dollars suffered the brunt of the selloff in the FX space. The MSCI Asia Pacific regional benchmark stock index fell 0.7 percent.

As we discussed in our weekly forecast, the move may reflect a market-wide shift in sentiment trends as signs of renewed weakness emerging in the March set of US economic data compound lingering recession in the Eurozone. Taken together with today’s disappointing set of Chinese GDP figures, this suggests all three of the world’s top growth engines (and over half of global GDP) are flashing warning signs.

Looking ahead, S&P 500 index futures are pointing sharply lower, hinting more of the same is likely ahead. The economic calendar is relatively quiet, offering little in terms of event risk to break the markets’ momentum. The US Empire Manufacturing gauge is set to show factory-sector activity in New York State slowed in April. Citigroup Inc is also due to deliver its first-quarter earnings report, with traders keeping a close eye on the bank’s forward guidance to help handicap global financial health trends.

Want to see economic data releases directly on your charts? Try this App.

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

22:30

NZD

Performance Services Index (MAR)

55.4

-

55.5

23:01

GBP

Rightmove House Prices (YoY) (APR)

0.4%

-

1.2% (R-)

23:01

GBP

Rightmove House Prices (MoM) (APR)

2.1%

-

1.7%

1:30

AUD

Home Loans (FEB)

2.0%

1.5%

-0.3% (R+)

1:30

AUD

Investment Lending (FEB)

1.8%

-

4.4%

1:30

AUD

Value of Loans (MoM) (FEB)

1.2%

-

1.2%

2:00

CNY

Fixed Assets Inv Excl. Rural YTD (YoY) (MAR)

20.9%

21.3%

21.2%

2:00

CNY

Retail Sales (YoY) (MAR)

12.6%

12.6%

2:00

CNY

Retail Sales YTD (YoY) (MAR)

12.4%

12.5%

12.3%

2:00

CNY

Real GDP YTD (YoY) (1Q)

7.7%

8.0%

7.8%

2:00

CNY

Real GDP (QoQ) (1Q)

1.6%

2.0%

2.0%

2:00

CNY

Real GDP (YoY) (1Q)

7.7%

8.0%

7.9%

2:00

CNY

Industrial Production YTD (YoY) (MAR)

9.5%

10.0%

9.9%

2:00

CNY

Industrial Production (YoY) (MAR)

8.9%

10.1%

2:00

CNY

Business Climate Index (1Q)

125.6

-

124.4

2:00

CNY

Entrepreneur Confidence Index (1Q)

122.4

-

120.4

4:30

JPY

Industrial Production (MoM) (FEB F)

0.6%

-

-0.1%

4:30

JPY

Industrial Production (YoY) (FEB F)

-10.5%

-

-11.0%

4:30

JPY

Capacity Utilization (MoM) (FEB F)

0.7%

-

1.7%

6:00

JPY

Machine Tool Orders (YoY) (MAR F)

-15.7%

-

-21.6%

Euro Session:

GMT

CCY

EVENT

ACT

EXP

PREV

9:00

EUR

Euro-Zone Trade Balance s.a. (€) (FEB)

12.0B

10.0B

8.7B (R-)

9:00

EUR

Euro-Zone Trade Balance (€) (FEB)

10.4B

5.0B

-4.7B (R-)

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.3002

1.3147

GBPUSD

1.5296

1.5388

--- 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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15 April 2013 11:15 GMT