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Forex: Yen Bought on Syria-Linked Jitters, Euro May Rise on IFO Data

By , Currency Strategist
27 August 2013 06:55 GMT

The Japanese Yen rose amid risk aversion as Asian markets followed Wall Street lower on Syria-linked risk aversion. The Euro may rise on Augusts’ German IFO data.

Talking Points

  • Yen Rallies, Aussie and NZ Dollars Sink on Syria-Linked Jitters Spark Risk Aversion
  • Euro May Rise as German IFO Gauge Hits 6-Month High, Denting ECB Easing Bets

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The Japanese Yen outperformed while the sentiment-linked Australian and New Zealand Dollars fell as Asian stocks followed Wall Street lower overnight. The MSCI Asia Pacific regional benchmark equity index fell 0.7 percent. The newswires attributed the flare-up of risk aversion to swelling geopolitical risk after US Secretary of State John Kerry said the Syrian government will be held accountable for its use of chemical weapons. The prospect of direct US involvement in Syria’s bloody civil conflict appears to have stoked concerns about spillover into wider regional turmoil, unnerving investors.

Germany’s IFO Survey of business confidence is in focus in European trading hours. Expectations suggest the headline Business Climate gauge rose to a six-month high in August. News-flow out of the currency bloc has increasingly outperformed relative to expectations over recent months (according to data compiled by Citigroup), opening the door for an upside surprise. The Euro continues to track the relative monetary policy outlook (as implied by the front-end bond yield spread), hinting a supportive IFO print that weighs against the probability of further ECB easing is likely to boost the single currency.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

1:30

CNY

Industrial Profits YTD (YoY) (JUL)

11.1%

-

11.1%

5:00

JPY

Small Business Confidence (AUG)

49.7

-

49.4

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:00

EUR

German IFO - Business Climate (AUG)

107.0

106.2

High

8:00

EUR

German IFO - Current Assessment (AUG)

111.0

110.1

High

8:00

EUR

German IFO - Expectations (AUG)

103.1

102.4

High

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3297

1.3335

1.3352

1.3373

1.3390

1.3411

1.3449

GBPUSD

1.5472

1.5527

1.5552

1.5582

1.5607

1.5637

1.5692

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

To contact Ilya, email ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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27 August 2013 06:55 GMT