Dollar and Yen Aim Higher as Bernanke, Spain Rating Cut Hurt Sentiment

2012-06-08 07:09:00 Ilya Spivak, Head Strategist, APAC

Talking Points

Dollar and Yen Rise as Bernanke Stays Mum on QE3, Fitch Downgrades Spain
S&P 500 Index Futures Point Sharply Lower, Hinting Risk Aversion to Continue

The US Dollar and Japanese Yen rose against their top counterparts in overnight trade as Asian stocks declined, boosting demand for the go-to haven currencies. The MSCI Asia Pacific regional benchmark equity index sank 1.5 percent as traders responded to ambiguity about future stimulus efforts in Federal Reserve Chairman Ben Bernanke’s testimony to the US Congress. Investors were looking for concrete guidance on a QE3 program in light of the latest stretch of disappointing US economic data, hoping additional asset purchases might boost demand from a key market for regional exporters.

Looking ahead, the economic calendar is relatively quiet in European hours, putting risk sentiment trends at the forefront of guiding price action. S&P 500 stock index futures are pointing sharply lower in late Asian trade, hinting that continued risk aversion is likely to continue driving haven currencies higher against the majors. Besides disappointment on the Fed stimulus front, a pickup in Eurozone sovereign concerns compounds downward pressure on risky assets after Fitch slashed Spain’s credit rating. Spreads between periphery 10-year bond yields and benchmark German equivalents are broadly wider and Eurozone sovereign CDS rates are on the upswing.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	GDP Annualized (1Q F)	4.7%	4.0%	4.1%
23:50	JPY	GDP (QoQ) (1Q F)	1.2%	1.1%	1.0%
23:50	JPY	Nominal GDP (QoQ) (1Q F)	1.2%	1.1%	1.0%
23:50	JPY	GDP Deflator (YoY) (1Q F)	-1.3%	-1.2%	-1.2%
23:50	JPY	Current Account Total (¥)	333.8B	440.8B	1589.4B
23:50	JPY	Adjusted Current Account Total (¥)	288.6B	615.6B	785.5B
23:50	JPY	Trade Balance - BOP Basis (¥)	-463.9B	-450.7B	4.2B
23:50	JPY	Current Account Balance (YoY)	-21.2%	7.50%	-8.6%
23:50	JPY	Bank Lending Banks ex-Trust	0.4%	0.40%	0.4%
23:50	JPY	Bank Lending incl Trusts (YoY)	0.3%	-	0.3%
1:30	AUD	Trade Balance (APR)	-900M	-203M	-1282M (R+)
1:30	AUD	Home Loans (APR)	0.2%	0.0%	0.8%
1:30	AUD	Investment Lending (APR)	1.7%	-	-1.7%
1:30	AUD	Value of Loans (MoM) (APR)	0.2%	0.0%	0.7%
4:30	JPY	Bankruptcies (YoY) (MAY)	7.2%	-	-6.7%
5:00	JPY	Eco Watchers Survey: Current (MAY)	47.2	50.0	50.9
5:00	JPY	Eco Watchers Survey: Outlook (MAY)	48.1	50.0	50.9

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
-	GBP	New Car Registrations (YoY)	-	3.3%	Low
6:00	EUR	German Current Account (€) (APR)	11.0B	19.8B	Medium
6:00	EUR	German Trade Balance (€)(APR)	13.0B	17.4B	Medium
6:00	EUR	German Exports s.a. (MoM) (APR)	-0.7%	0.8%	Low
6:00	EUR	German Imports s.a. (MoM) (APR)	-0.1%	1.0%	Low
6:30	EUR	Bank of France Business Sentiment (MAY)	93	95	Low
6:45	EUR	French Central Govt. Balance (€) (APR)	-	-29.4B	Low
6:45	EUR	French Trade Balance (€) (APR)	-5500M	-5721M	Low
8:30	GBP	BoE/GfK Inflation Next 12 Mths (MAY)	-	3.5%	Low
8:30	GBP	PPI Input n.s.a. (MoM)	-1.6%	-1.5%	Low
8:30	GBP	PPI Input n.s.a. (YoY)	1.2%	1.2%	Low
8:30	GBP	PPI Output n.s.a. (MoM)	0.1%	0.7%	Medium
8:30	GBP	PPI Output n.s.a. (YoY)	3.2%	3.3%	Medium
8:30	GBP	PPI Output Core n.s.a. (MoM)	0.2%	0.6%	Low
8:30	GBP	PPI Output Core n.s.a. (YoY)	2.3%	2.3%	Low