Talking Points

• Dollar, Yen Soar After Fed Minutes Fail to Boost QE3 Expectations
• Aussie Sinks as Data Shows Economy Unexpectedly Shed 27K Jobs
• Bank of Japan Reshuffles Stimulus Funds but Withholds Expansion

The US Dollar and Japanese Yen soared overnight as Asian stocks declined, boosting demand for the go-to haven currencies. The MSCI Asia Pacific regional benchmark equity index slid 1.5 percent after minutes from June’s FOMC meeting failed to advance expectations of a QE3 program to be unveiled in the near term.

The Yen outperformed as the Bank of Japan opted not to materially increase stimulus efforts, reshuffling funds between the credit-loan and asset-purchase programs instead. The Australian Dollar bore the brunt of the selloff as June’s Employment figures disappointed, showed the economy unexpectedly shed 27,000 jobs. May’s hiring increase was also revised sharply lower. The New Zealand Dollar was not far behind, with risk aversion compounded by a soft manufacturing PMI print.

S&P 500 stock index futures are pointing sharply lower, pointing to more of the same ahead. Eurozone Industrial Production figures headline a lackluster European data docket. Output is expected to fall 3.2 percent in the year to May, marking the largest drop since December 2009. Dismal economic conditions in the currency bloc are nothing new however and the outcome seems unlikely to generate a significant response from price action barring a major upside surprise. Italy will also sell €7.5 billion in 12-month bills.

Asia Session: What Happened

Euro Session: What to Expect

Critical Levels

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

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com