Dollar, Yen May Add to Gains as S&P 500 Futures Signal Risk Aversion

2012-08-13 06:05:00 Ilya Spivak, Head Strategist, APAC

Talking Points

Dollar, Yen Rise After Japan’s GDP Report Disappoints Expectations
Italian Bill Auction Highlights Muted European Event Risk Calendar
S&P 500 Stock Index Futures Hint at Continued Risk Aversion Ahead

The US Dollar and Japanese Yen outperformed in overnight trade, rising against all of their leading counterparts as FX markets displayed all the familiar characteristics of risk aversion. A disappointing set of Japanese GDP figures stands out as a lone catalyst for the dour mood, although Asian shares were suspiciously deaf to the release. The report showed output grew 0.3 percent in the third quarter, falling short of expectations calling for a 0.6 percent increase.

The economic calendar is quiet in European hours, hinting risk sentiment is likely to retain control of price action. With that in mind, risk-averse dynamics appear likely to carry forward, with S&P 500 stock index futures pointing firmly lower late into the overnight session. Italy may generate a bit of activity as the largest of the debt-stricken Eurozone member states sells €8 billion in 12-month bills. Traders will look to average yield and bid-to-cover readings as a gauge of sovereign stress in the region.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Food Prices (MoM) (JUL)	0.2%	-	1.4%
23:50	JPY	Gross Domestic Product Annualized (2Q P)	1.4%	2.3%	5.5% (R+)
23:50	JPY	Gross Domestic Product (QoQ) (2Q P)	0.3%	0.6%	1.3% (R+)
23:50	JPY	Nominal Gross Domestic Product (QoQ) (2Q P)	-0.1%	0.4%	1.4% (R+)
23:50	JPY	Gross Domestic Product Deflator (YoY) (2Q P)	-1.1%	-0.8%	-1.3%

Euro Session: What to Expect

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
6:00	EUR	German Wholesale Price Index (MoM) (JUL)	0.3%(A)	-1.1%	Low
6:00	EUR	German Wholesale Price Index (YoY) (JUL)	2.0% (A)	1.1%	Low
8:30	EUR	French Current Account (€) (JUN)	-4.1B	-4.1B	Low
8:30	EUR	Italian General Government Debt (JUN)	-	1966.3B	Low
9:00	EUR	Italy to Sell €8B in 12-mo Bills	-	-	Medium
9:30	EUR	Germany to Sell €4B in 6-mo Bills	-	-	Low
13:00	EUR	France to Sell €7.2B in 3-, 6- and 12-mo Bills	-	-	Low