Yen Rally, Aussie Selloff to Continue as Risk Appetite Unravels

2013-06-11 10:05:00 Ilya Spivak, Head Strategist, APAC

The Japanese Yen is likely to continue higher while the Australian Dollar swoons as risk aversion grips financial markets after a disappointing BOJ policy announcement.

Talking Points

Yen Soars, Aussie and Kiwi Dollars Tumble as Risk Aversion Grips FX Markets
Bank of Japan Keeps Monetary Policy Unchanged, Ignores Recent Market Swings
Risk Sentiment Swoon Likely to Continue with Little on Tap to Derail Momentum

The Japanese Yen soared while the Australian and New Zealand Dollars underperformed as risk aversion gripped financial markets in overnight trade. The MSCI Asia Pacific regional benchmark stock index fell 0.7 percent as the Bank of Japan opted to maintain its monetary policy stance unchanged, with the policy statement carrying no mention of recent market volatility much less any measures to address it. Traders seemed to be hoping for an increase in the size of ETF and J-REIT purchases and/or a change in funding terms to help stabilize asset prices.

European markets seem to be pressing ahead with risk-averse cues noted in Asia. USDJPY and AUDUSD accelerated lower anew, sinking alongside S&P 500 futures after a brief respite in late overnight trade as European bond trading came online at 6:00 GMT. The region’s stock exchanges have now joined in the selloff as well, trading down nearly 1 percent on average. A lackluster set of economic releases on tap in the US follows a quiet outing on the data front in Europe, suggesting there is relatively little out there to derail established momentum.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Japan Money Stock M3 (YoY) (MAY)	2.8%	2.8%	2.6%
23:50	JPY	BSI Large All Industry (QoQ) (2Q)	5.9	-	1
23:50	JPY	BSI Large Manufacturing (QoQ) (2Q)	5.0	-	-4.6
1:30	AUD	Owner-Occupied Home Loan Value (MoM) (APR)	-0.9%	-	5.1%
1:30	AUD	Home Loans (APR)	0.8%	2.0%	4.8%
1:30	AUD	Investment Lending (APR)	1.1%	-	1.4%
1:30	AUD	NAB Business Conditions (MAY)	-4	-	-6
1:30	AUD	NAB Business Confidence (MAY)	-1	-	-1
2:48	JPY	Bank of Japan Monetary Policy Announcement	-	-	-
5:45	CHF	SECO June 2013 Economic Forecasts	-	-	-
6:00	JPY	Machine Tool Orders (YoY) (MAY P)	-7.4%	-	-23.6%
6:30	JPY	BoJ Governor Kuroda Press Conference	-	-	-

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
8:30	GBP	Industrial Production (MoM) (APR)	0.1% (A)	0.7%	Medium
8:30	GBP	Industrial Production (YoY) (APR)	-0.6% (A)	-1.4%	Medium
8:30	GBP	Manufacturing Production (MoM) (APR)	-0.2% (A)	1.1%	Low
8:30	GBP	Manufacturing Production (YoY) (APR)	-0.5% (A)	-1.4%	Low
9:00	EUR	German Court Hearing on ESM	-	-	Medium