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Yen Rally, Aussie Selloff to Continue as Risk Appetite Unravels

By , Currency Strategist
11 June 2013 10:05 GMT

The Japanese Yen is likely to continue higher while the Australian Dollar swoons as risk aversion grips financial markets after a disappointing BOJ policy announcement.

Talking Points

  • Yen Soars, Aussie and Kiwi Dollars Tumble as Risk Aversion Grips FX Markets
  • Bank of Japan Keeps Monetary Policy Unchanged, Ignores Recent Market Swings
  • Risk Sentiment Swoon Likely to Continue with Little on Tap to Derail Momentum

The Japanese Yen soared while the Australian and New Zealand Dollars underperformed as risk aversion gripped financial markets in overnight trade. The MSCI Asia Pacific regional benchmark stock index fell 0.7 percent as the Bank of Japan opted to maintain its monetary policy stance unchanged, with the policy statement carrying no mention of recent market volatility much less any measures to address it. Traders seemed to be hoping for an increase in the size of ETF and J-REIT purchases and/or a change in funding terms to help stabilize asset prices.

European markets seem to be pressing ahead with risk-averse cues noted in Asia. USDJPY and AUDUSD accelerated lower anew, sinking alongside S&P 500 futures after a brief respite in late overnight trade as European bond trading came online at 6:00 GMT. The region’s stock exchanges have now joined in the selloff as well, trading down nearly 1 percent on average. A lackluster set of economic releases on tap in the US follows a quiet outing on the data front in Europe, suggesting there is relatively little out there to derail established momentum.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Japan Money Stock M3 (YoY) (MAY)

2.8%

2.8%

2.6%

23:50

JPY

BSI Large All Industry (QoQ) (2Q)

5.9

-

1

23:50

JPY

BSI Large Manufacturing (QoQ) (2Q)

5.0

-

-4.6

1:30

AUD

Owner-Occupied Home Loan Value (MoM) (APR)

-0.9%

-

5.1%

1:30

AUD

Home Loans (APR)

0.8%

2.0%

4.8%

1:30

AUD

Investment Lending (APR)

1.1%

-

1.4%

1:30

AUD

NAB Business Conditions (MAY)

-4

-

-6

1:30

AUD

NAB Business Confidence (MAY)

-1

-

-1

2:48

JPY

Bank of Japan Monetary Policy Announcement

-

-

-

5:45

CHF

SECO June 2013 Economic Forecasts

-

-

-

6:00

JPY

Machine Tool Orders (YoY) (MAY P)

-7.4%

-

-23.6%

6:30

JPY

BoJ Governor Kuroda Press Conference

-

-

-

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:30

GBP

Industrial Production (MoM) (APR)

0.1% (A)

0.7%

Medium

8:30

GBP

Industrial Production (YoY) (APR)

-0.6% (A)

-1.4%

Medium

8:30

GBP

Manufacturing Production (MoM) (APR)

-0.2% (A)

1.1%

Low

8:30

GBP

Manufacturing Production (YoY) (APR)

-0.5% (A)

-1.4%

Low

9:00

EUR

German Court Hearing on ESM

-

-

Medium

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.3201

1.3326

GBPUSD

1.5516

1.5608

--- 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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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11 June 2013 10:05 GMT