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

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2405

1.2610

GBPUSD

1.5349

1.5609

--- 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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