Forex: Yen, Aussie Dollar Rise in the Aftermath of US Jobs Report

2014-01-13 09:09:00 Ilya Spivak, Head Strategist, APAC

Talking Points:

Japanese Yen, Australian Dollar Rise as Asia Reacts to US Jobs Report
Fed Unlikely to Abandon “Tapering” QE But Speculation Will Emerge
Atlanta Fed Pres. Lockhart to Start Busy Week of Official Commentary

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The Japanese Yen and the Australian Dollar advanced in overnight trade as Asian traders took their shot at responding to Friday’s disappointing US employment data. The two yield-sensitive currencies have been moving in lock-step with 10-year US Treasury yields, reflecting the impact of QE “taper” speculation. This dynamic has been thrown into reverse as markets ponder the possibility that the FOMC may have moved too soon to begin removing stimulus and will now be forced to reconsider.

While the rate-setting FOMC committee seems unlikely to abandon its medium-term strategy on the basis of one data point, speculation is likely to run rampant nonetheless. In the hours ahead, the spotlight will be Atlanta Fed President Dennis Lockhart, who is set to kick off a busy docket of “Fed-speak” on tap this week. Signs of a dovish rhetorical shift that stresses the data dependence of future QE withdrawal and reiterates the possibility that the process may be slowed or halted may weigh on the US Dollar.

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Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
0:30	AUD	Credit Card Balances (A$) (NOV)	49.7B	-	48.9B
0:30	AUD	Credit Card Purchases (A$) (NOV)	22.4B	-	23.0B
0:30	AUD	Value of Loans (MoM) (NOV)	1.9%	-	1.8%
0:30	AUD	Home Loans (NOV)	1.1%	1.0%	1.1%
0:30	AUD	Investment Lending (NOV)	1.5%	-	6.8%
0:30	AUD	ANZ Job Advertisements (MoM) (DEC)	-0.7%	-	-0.9%

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
9:00	EUR	Italian Industrial Production (MoM) (NOV)	0.3%	0.5%	Low
9:00	EUR	Italian Industrial Production wda (YoY) (NOV)	0.0%	-0.5%	Low
9:30	GBP	Lloyds Employment Confidence (DEC)	-	-14	Low