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US Dollar May Rise Alongside Yen as Risk Aversion Builds Anew

US Dollar May Rise Alongside Yen as Risk Aversion Builds Anew

Talking Points:

  • Yen looks past Asian shares advance, drops alongside S&P 500 futures
  • FX markets likely to look past UK and Eurozone PMIs, US ISM surveys
  • US Dollar may find building support as risk aversion gains momentum

The anti-risk Japanese Yen advanced despite continued recovery on Asian stock exchanges, tracking S&P 500 futures downward. This suggested overnight strength in the equities space may have amounted to little more than catch-up momentum after a third consecutive day of gains on Wall Street. Meanwhile, FX markets appeared to look ahead alongside US index futures, where the bias appeared to swing back toward the risk-off side of the spectrum.

UK and Eurozone Manufacturing PMI data headlines the economic calendar in European trading hours and the analogous US ISM Manufacturing survey enters the spotlight later in the day. None of these outcomes are likely to generate a meaningful response from investors however because they are unlikely to reflect the impact of post-Brexit vote uncertainty on sector activity trends.

With that in mind, broad-based risk appetite trends are likely retain control over price action. US index futures continue to point lower and the Yen is building upward momentum as Europe comes online. Meanwhile, the benchmark 10-year US Treasury bond yield has fallen to a record low. This seems to point toward continued risk aversion into the end of the trading week. Besides the Japanese unit, such a scenario is likely to prove supportive for the US Dollar.

Asia Session

23:30AUDAiG Perf of Mfg Index (JUN)51.8-51
23:30JPYJobless Rate (MAY)3.2%3.2%3.2%
23:30JPYJob-To-Applicant Ratio (MAY)1.361.351.34
23:30JPYOverall Household Spending (YoY) (MAY)-1.1%-1.1%-0.4%
23:30JPYNatl CPI (YoY) (MAY)-0.4%-0.5%-0.3%
23:30JPYNatl CPI Ex Fresh Food (YoY) (MAY)-0.4%-0.4%-0.3%
23:30JPYNatl CPI Ex Food, Energy (YoY) (MAY)0.6%0.6%0.7%
23:30JPYTokyo CPI (YoY) (JUN)-0.5%-0.4%-0.5%
23:30JPYTokyo CPI Ex-Fresh Food (YoY) (JUN)-0.5%-0.5%-0.5%
23:30JPYTokyo CPI Ex Food, Energy (YoY) (JUN)0.4%0.4%0.5%
23:50JPYTankan Large Mfg Index (2Q)646
23:50JPYTankan Large Mfg Outlook (2Q)633
23:50JPYTankan Large Non-Mfg Index (2Q)191922
23:50JPYTankan Large Non-Mfg Outlook (2Q)171717
23:50JPYTankan Large All Industry Capex (2Q)6.2%5.3%-0.9%
23:50JPYTankan Small Mfg Index (2Q)-5-6-4
23:50JPYTankan Small Mfg Outlook (2Q)-7-8-6
23:50JPYTankan Small Non-Mfg Index (2Q)14
23:50JPYTankan Small Non-Mfg Outlook (2Q)-4-2-3
00:00AUDCoreLogic House Px MoM (JUN)0.5%-1.6%
01:00CNYManufacturing PMI (JUN)505050.1
01:00CNYNon-manufacturing PMI (JUN)53.7-53.1
01:45CNYCaixin China PMI Mfg (JUN)48.649.249.2
02:00JPYNikkei Japan PMI Mfg (JUN F) 48.1-47.8
05:00JPYVehicle Sales (YoY) (JUN)3.0%-6.6%
05:00JPYNatl CPI Ex Fresh Food, Energy (YoY) (MAY)0.8%0.8%0.9%
05:00JPYConsumer Confidence Index (JUN)41.841.140.9
06:30AUDCommodity Index AUD (JUN)89.7-90.3
06:30AUDCommodity Index (YoY) (JUN)9.9%--10.0%

European Session

07:15CHFRetail Sales Real (YoY) (MAY)-1.6% (A)-2.2%Low
07:15EURECB’s Coeure Speaks in Paris --Low
07:30CHFPMI Mfg (JUN)55.355.8Low
07:45EURMarkit/ADACI Italy Mfg PMI (JUN)52.452.4Low
07:50EURMarkit France Mfg PMI (JUN F) 47.947.9Low
07:55EURMarkit/BME Germany Mfg PMI (JUN F) 54.454.4Medium
08:00EURMarkit Eurozone Mfg PMI (JUN F) 52.652.6Medium
08:30GBPMarkit UK PMI Mfg SA (JUN)50.150.1Medium
09:00EURUnemployment Rate (MAY)10.1%10.2%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.