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Japanese Yen Gains as Liquidation Hits Asian Stock Exchanges

By , Currency Strategist
26 July 2013 07:30 GMT

The Japanese Yen outperformed in overnight trade as Asian stocks swooned in what appeared to be pre-positioning ahead of next week’s heavy event risk.

Talking Points

  • Japanese Yen Outperforms as Liquidation Hits Asian Stock Exchanges
  • UofM Consumer Confidence Gauge Revision Unlikely to Stir Volatility

The Japanese Yen outperformed in overnight trade Asian stocks declined, weighing on carry trades funded in the perennially low-yielding currency. The MSCI Asia Pacific regional benchmark equity index slid 0.7 percent. The move seems likely to have reflected protective profit-taking ahead of next week’s volatility.

The markets remain locked in a “taper on vs. taper off” dynamic as traders attempt to handicap the likelihood and timing of a reduction in Fed stimulus efforts, and next week presents a perfect storm of high-profile fundamental news-flow to drive speculation. US GDP, ISM, NFP and the monthly FOMC policy announcement are all on tap.

The economic calendar is quiet through the end of the week, with the final revision of July’s University of Michigan gauge of US Consumer Confidence the only item of note on the docket. Expectations call for a slight upgrade to 84.0 from a flash estimate of 83.9. The outcome is unlikely to yield a material response from price action absent a major deviation from the consensus forecast as markets look ahead to next week’s event risk overload.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

JPY

National CPI (YoY) (JUN)

0.2%

0.1%

-0.3%

23:30

JPY

National CPI Ex-Fresh Food (YoY) (JUN)

0.4%

0.3%

0.0%

23:30

JPY

National CPI Ex Food, Energy (YoY) (JUN)

-0.2%

-0.3%

-0.4%

23:30

JPY

Tokyo CPI (YoY) (JUL)

0.4%

0.2%

0.0%

23:30

JPY

Tokyo CPI Ex-Fresh Food (YoY) (JUL)

0.3%

0.3%

0.2%

23:30

JPY

Tokyo CPI Ex Food, Energy (YoY) (JUL)

-0.4%

-0.3%

-0.4%

1:45

CNY

MNI Business Sentiment Indicator (JUL)

51.3

-

53.7

Euro Session:

GMT

CCY

EVENT

EXP/ACT

EXP

PREV

6:00

EUR

German Import Price Index (MoM) (JUN)

-0.8% (A)

-0.3%

-0.4%

6:00

EUR

German Import Price Index (YoY) (JUN)

-2.2% (A)

-1.6%

-2.9%

6:45

EUR

French Consumer Confidence (JUL)

82 (A)

79

79

10:00

EUR

ECB Announces 3yr LTRO Repayment

-

-

€2.4B

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.3162

1.3416

GBPUSD

1.5281

1.5529

--- 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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26 July 2013 07:30 GMT