Daily Winners and Losers
The yen surged for a second consecutive day as concerns that Italy may be engulfed by the European debt crisis fueled heightened risk aversion flows early in the week. As EU officials convene in Brussels to discuss how to structure aid for Greece, comments made by economic and monetary affairs commissioner Olli Rehn saw traders seeking haven after he cited ‘extreme concern’ about the region’s debt crisis reaching Italy. As contagion fears continue to mount regarding the region’s fourth largest economy, equities and commodities plummeted as risk appetite quickly dwindled. The yen topped the performance charts early in North American trade, advancing 0.34% against the greenback as traders seek safety amid lower-yielding “haven” assets. The USD/JPY pair broke below the convergence of the lower bound trendline support dating back to June 8th and the 23.6% Fibonacci extension taken from the June 17th and 30th troughs at 80.55. Risk-Off flows are likely to keep the pair under pressure with interim support targets eyed at 80.25, backed by the 80-figure and 79.75. Topside resistance holds at 80.55, followed by the 38.2% Fib extension at 80.70 and the 50% extension at 80.85. Overnight, traders will be eyeing data out of Japan, with the BOJ rate decision on tap. The central bank is widely expected to hold interest rates at 0.10% as the nation struggles to deal with the aftermath of the devastating earthquake and subsequent tsunami last March.
Key Levels/Indicators
|
Level/Indicator |
Level |
|
50-Day SMA |
80.78 |
|
20-Day SMA |
80.63 |
|
10-Day SMA |
80.82 |
|
2011 JPY High |
76.35 |
Upcoming Events
|
Date |
GMT |
Release |
Expected |
Actual |
|
7/11 |
23:50 |
Tertiary Industry Index (MoM) (MAY) |
0.7% |
2.6% |
|
7/11 |
23:50 |
Domestic Corporate Goods Price Index (MoM) (JUN) |
-0.2% |
-0.1% |
|
7/11 |
23:50 |
Domestic Corporate Goods Price Index (YoY) (JUN) |
2.4% |
2.2% |
|
7/11 |
- |
Bank of Japan Interest Rate Decision |
0.10% |
0.10% |
The euro remains under considerable pressure after falling more than 1.6% against the dollar early in the session. The single currency moved a staggering 173% of its daily average true range as contagion concerns continue to weigh on market sentiment, with the EUR/USD pair breaking below trendline support dating back to the May 23rd lows. A long-term Fibonacci extension taken from the June 2010 and the January 2011 troughs reveals key support here at the 50% extension at 1.4050. The pair continues to straddle this level with a break eyeing interim support at psychological 1.40-handle, backed by 1.3940 and the 1.39-figure. Resistance stands at the 1.41-handle with subsequent ceilings seen at 1.4150 and 1.42. The pair is likely to remain under considerable pressure as traders jettison the single currency in favor or the swissie, the yen, and the dollar. Overnight investors will be eying data out of Germany, with the June CPI print out at 6:00 GMT. Consensus estimates call for inflation to remain unchanged at 0.1% m/m and 2.3% y/y.
Key Levels/Indicators
|
Level/Indicator |
Level |
|
50-Day SMA |
1.3762 |
|
20-Day SMA |
1.4290 |
|
10-Day SMA |
1.4283 |
|
2011 EUR High |
1.4938 |
Upcoming Events
|
Date |
GMT |
Release |
Expected |
Actual |
|
7/12 |
6:00 |
German Consumer Price Index (MoM) (JUN F) |
0.1% |
0.1% |
|
7/12 |
6:00 |
German Consumer Price Index (YoY) (JUN F) |
2.3% |
2.3% |
|
7/12 |
6:00 |
German Consumer Price Index - EU Harmonized (MoM) (JUN F) |
0.0% |
0.0% |
|
7/12 |
6:00 |
German Consumer Price Index - EU Harmonized (YoY) (JUN F) |
2.4% |
2.4% |
Written by Michael Boutros, Currency Analyst for DailyFX.com
To contact the author of this report or receive his daily reports, please send inquiries to:mboutros@dailyfx.com
You can also follow Michael on Twitter@MBForex
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