Japanese Yen looks vulnerable in the wake of the Summit. It will last?

Fundamental forecasts for the Japanese Yen: neutral
The Yen had a week relatively strong, finish as the third best performer behind the Australia and New Zealand $. Despite the large gathering risk Friday, the Yen was able to exceed the Dollar of the United States, where it acquired more than 0.78% against. Indeed, the week better sought the Yen before Friday, he became a gesture widely accepted (by this analyst included) that the Summit of the Euro area, would be substantive measures little, if any, to stem the crisis at its roots. And while we believe that this will be the case - that the markets would measures of the Summit as "not enough": the combination of a clarity out of Europe, the end of the month and the end of the quarter was enough to see that the Yen dumped for the currencies of performance more high and correlated with the risk of the assets.
Beyond the Summit and move to some wild speculation before the usual discussion of the economic role of this week, the price today action is strangely similar to the day to the top of the zone Euro concluded in October 2012. In fact, if November 30 is not considered, the Australian Dollar and the Euro had their performance stronger from that day - and then markets subsequently fell into a spiral through the first weeks of three and a half of November.
Similarly, the so-called "pause" to the crisis created an air of feeling this appetite for risk would be abundant, at least for a few days. And with the weakening Yen, then as it did today, officials at the Bank of Japan intervened in markets October 31, 2011, for the period of "calm" to weaken their currency. Even if it is a remote and largely unknown possibility, there is little reason to believe that a more moderate BoJ wouldn't do the same thing in the next few days.
With respect, we find that a rate BoJ decision comes in the second week of July. To come from this meeting, however, there are a few pieces of data on the record which could influence the BoJ when they convene. Broadly speaking, there are two days, what matters this week of the Japanese Yen in terms of risk of the planned event: Monday and Friday.
On Monday, Tankan survey second quarter are the and they expected you to show an image of competing for the sectors of manufacturing and non-manufacturing of the Japanese economy growth. While large manufacturers Tankan index is expected to remain on hold at-4, Outlook should fall to-4 to-3 in the first quarter, according to a Bloomberg News survey. On the reverse, the Tankan Non manufacturing index is expected to increase from 7 to 5, and the prospects are expected to improve to 6-5. Overall, this should be slightly positive round of polls Tankan, which might deter the BoJ to act at its meeting the week after.
Friday, two smaller versions are due, but they nevertheless deserve to be. The preliminary may coincides and indexes that are due, and both are expected to show the erosion of the views of the economy. The coincident Index, a composite index of indicators of the economic cycle, is expected to show a drop to 95.7 of 96.9 in April. Similarly, the main Index, a composite index of twelve key indicators of the economy Japan and is expected to decrease from 95.6 to 95.0.
Thus, what we are seeing here is a mix but distorted the image of the decline of the Japanese economy by the various data due this week. When one considers the sum, they may be sufficient to start the speculation about the BoJ do something more accommodating at their meeting next week. And while these are considerations strongly downward, we always believe them that results of the Summit of the Euro area will be low, so the rise of the Yen is broadly neutral with the prospect of a significant and rapid change for security at any time in the near future. -CV

$ Dollar Vulnerable if US Economic Data Boosts Risk Appetite Recovery

29 May 2012 07:16 GMT Talking Points
Commodity Dollars Outperform in Asia on China Stimulus Hopes Euro Risks Skewed to the Upside Before German Inflation Figures US Consumer Confidence, Dallas Fed Prints May Weigh on USD The major currencies were little changed against the US Dollar (ticker: USDollar) overnight as thin post-holiday liquidity conditions and the absence of market-moving cues from economic data or risk sentiment trends left FX traders without a significant catalyst to spark volatility. The Australian, Canadian and New Zealand Dollars narrowly outperformed as Asian stocks advanced, pulling the sentiment-linked currencies along for the ride. The MSCI Asia Pacific regional benchmark equity index added 0.9 percent after China’s finance ministry said it will allocate up to 2 billion Yuan per year to subsidize purchases of fuel-efficient cars, raising hopes the spending injection will boost growth.
Looking ahead to European trading hours, the preliminary set of May’s German CPI figures is in focus. Expectations call for the headline inflation rate to hold at 2.1 percent. A print in line with expectations will mean little for ECB policy expectations and so seems unlikely to produce fireworks from price action. Indeed, given the scope of aggressive Euro selling over recent weeks, the risks appear skewed to the upside in the event that an upside surprise offers a compelling excuse to drive profit-taking. France and Italy are set to hold bond auctions, but short tenor of the debt on offer (see below) means the results may pass with little fanfare.
Later in the day, the focus will turn to the US economic calendar. May’s Consumer Confidence reading and the Dallas Fed Manufacturing Activity gauge are on tap, with expectations pointing to improvements on both fronts. Broadly speaking, data collected by Citigroup suggests US economic data has stabilized relative to expectations in May after three months of deterioration. This lays the foundation for stronger outcomes to buoy hopes that a firming (albeit unevenly so) recovery in North America can help offset weakness in Europe and Asia.
In the context of heavy selling across the risky asset space over recent weeks, this may help drive a recovery in sentiment, weighing on the safe-haven greenback against most of its top counterparts. USDJPY may prove to be an exception in this regard, where stronger US data is likely to translate into Dollar strength on the back of rising Treasury bond yields and fading QE3 expectations. S&P 500 stock index futures are pointing firmly higher in late Asian hours, reinforcing the likelihood of a risk-on scenario in the hours ahead.
Asia Session: What Happened
Household Spending (YoY) (APR)
Large Retailers' Sales (YoY) (APR)
HIA New Home Sales (MoM) (APR)
Small Business Confidence (MAY)
Euro Session: What to Expect
German Import Price Index (MoM) (APR)
German Import Price Index (YoY) (APR)
UBS Consumption Indicator (APR)
Italy to Sell €8.5M in 183-day Bills
German CPI - EU Harmonised (MoM) (MAY P)
German CPI - EU Harmonised (YoY) (MAY P)
France to Sell €8B in 91-364 day Bills
Critical Levels

$ Dollar, Yen, vulnerable, as markets absorb news related to the stream Greece

May 17, 2012 strategist 06: 33 GMT Talking Points
Dollar and Yen Correct lower in Asia, more than Q1 GDP Slump for the same likely prior to Confirmation of the Spain Bond Auction unlikely surprise us economic Data Set potential of Japan Boost risk Sentiment recovery forecast Tops of economic growth, Q4 revised Contraction Away The US Dollar and Japanese Yen corrected lower during the night that the stocks increased in Asian tradesinking of the currencies refuge go - to application. The MSCI Asia Pacific index rose 1% regional reference shares after topped expectations, Japanese GDP figures showing the output increased by 1% in the first quarter. The result of the fourth quarter has been revised also more clear contraction initially reported 0.7 to show a modest increase of 0.1% instead. The Japan is the second largest Asian economy after China and better performance it stimulated regional perspectives in General.
In the future, S & P 500 stock index futures are pointing more strongly, pointing out the risk appetite may continue to recover at the expense of the Dollar and the Yen in the next few hours. Corrective rebound seems reasonable. The prospect of the Greece out of the eurozone - the catalyst behind the last rout the entire spectrum of risky assets - appear to be shocking power for the time being given the traders to wait for a repeat of the general election on June 15 to get their bearings on the situation. In the meantime, the already exit negative news flow it is probably entered prices, encouraging a period of profit.
The economic calendar is relatively calm, with a final revision of the figures of the Spanish GDP amounting to the only little risk of important event. Expectations called the original result showing a contraction of 0.3% quarter to quarter to confirm. Madrid is also due to a slice of 2015 and 2016 bonds. Traders will be keeping an eye on the average yield and readings of submission to the other, but an increase in borrowing costs seems unlikely stir after the fireworks as German and Spanish spread between reference 10-year bond rate hit a record rate yesterday 487.7 bps.
Later in the day, the economic role of the U.S. can help feeling of higher training. Initial and continuing jobless claims are expected to print lower, with former hitting the lowest six weeks at 365 K whereas the latter defines an another four years to 3225K down. Separately, the tonnage of the Philadelphia Fed business confidence should rebound in may after having struck a minimum of three months in April. Finally, the composite Leading Indicators sees increase of 0.1% in April, marking the increase in the seventh row and reached the highest level since June 2008.
Asia session: What happened
-Prices of inputs (QoQ) (first quarter)
Price - output (QoQ) (first quarter)
Consumer Inflation expectation (may)
ANZ consumer confidence index (may)
ANZ (MoM) consumer confidence (may)
The average weekly wages (QoQ) (FEB)
The average weekly wages (YoY) (FEB)
Sales of condominiums in Tokyo (YoY) (APR)
Industrial production (MoM) (MAR, F)
Industrial production (YoY) (MAR, F)
Use of capacity (MoM) (MAR, F)
Commands of the machine tool (YoY) (APR F)
Session of the euro: what to expect
Critical levels

|| Vulnerable Euro Bond sale results, German forecast update

Discussion points
Euro seems vulnerable on the Italian and Dutch Bond Auction results Germany to release the value of macroeconomic forecast updates for 2012 Australian Dollar sank after ICC disappoints, stimulate the RBA cut rates Paris the Euro is in a precarious position that views on the results of auctions of binding andItalian Dutch markets and the release of macro-economic forecasts updated by the Ministry of the German economy. Rome will sell coupon 2014 debt and inflation-linked 2017 and 2019 paper while Amsterdam is 2014 and 2037 links. Traders will be be keeping a close eye on the average yields of signs of sovereign stress of return.
The auction comes in the growing concern that the anti-austerity feeling fuels political instability in the region and can undermine the efforts of debt reduction. French President Nicolas Sarkozy lost in the first round of his re-election challenger anti-austerity campaign Francois Holland over the weekend in Dutch Prime Minister Mark Rutte and his cabinet resigned yesterday, having failed to agree on additional measures for deficit reduction.
During this time in Germany, a set of update of the official Government forecasts will be size against readings of PMI manufacturing and services April sharp drop of yesterday. Officials cut their prospects for growth of GDP 2012 to 0.7% in January of 1.0% in October of last year. A further reduction could to influence the risk appetite - stimulating Mint haven such as the Dollar and the Japanese Yen - that the dominant across financial markets theme is the degree to which a recession in the euro area will be derailing world production as a whole.
The lower Australian Dollar in trade during the night, collapse up to 0.8% against its major counterparts, after the digits of the price index dropped by forecasts of economists and strengthened expectations of an RBA interest rate cut next week policy meeting. The report shows that annualized inflation rate fell to 1.6% in the first quarter, the lowest in two years and a half.
More worrisome, the decrease in percentage of 1.5 point rate of 3.1% in the three months to December 2011 marked the largest quarterly decline in more than a decade. Markets, now the price of the certainty of a 25 bps decrease the rate of loan of reference with a slight possibility of a greater reduction, according to data compiled by the Credit Switzerland. The prospects for 12 months implies now 110 bps overall relaxation.
Asia session: What happened
Corporate price (YoY) (MAR)
Index of consumer prices (QoQ) (first quarter)
Index of consumer prices (YoY) (first quarter)
Weighted median RBA (QoQ) (first quarter)
Weighted median RBA (YoY) (first quarter)
Conference Board leading economic index (MAR)
Credit card spending s.a. (MoM) (MAR)
Credit card, spending (YoY) (MAR)
Session of the euro: what to expect
Of France (APR) consumer confidence indicator
Survey companies of France - aggregate demand (APR)
Netherlands to sell 2014-2037 links
Italian hourly wage (MoM) (MAR)
Italian hourly wages (YoY) (MAR)
Public finances (PSNCR) (£) (MAR)
Sector public borrowing Net (£) (MAR)
Italy sells 2014 zero-PCN, 2017-2019 I / L links
German Econ Department publishes forecasts
Critical levels

Weakness of the USD offers purchase opportunity, vulnerable JPY on the BoJ policy

Currency Analyst 09 April 2012 15:40 GMT   The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.02 percent lower from the open after moving 51 percent of its average true range, and we may see the greenback track sideways over the next 24-hours of trading as market participants remain offline for the Easter holiday. However, as Chairman Ben Bernanke is scheduled to speak at 19:15 GMT, the fresh batch of comments is likely to fuel increased volatility in the reserve currency, and we may see the central bank head talk down speculation for another large-scale asset purchase program as Fed officials anticipate to see a stronger recovery in 2012. In turn, the recent pullback in the USDOLLAR may provide a buying opportunity for currency traders, and we should see the greenback resume the advance from earlier this year as interest rate expectations pick up.  Indeed, speculation for QE3 resurfaced amid the dismal U.S. Non-Farm Payrolls for March, but we may see Mr. Bernanke continue to speak out against more easing as the world’s largest economy gets on a more sustainable path. According to Credit Suisse overnight index swaps, market participants are increasing bets for a rate hike over the next 12-months, and the shift in the policy outlook reinforces a bullish outlook for the USD as the Fed looks to conclude its easing cycle in 2012. As the index maintains the upward trending channel from earlier this year, we are still looking for another run at the 78.6 percent Fibonacci retracement around 10,118, but the slew of central bank rhetoric on tap for this week may bring about a bullish breakout in the index as Fed officials continue to take note of the more robust recovery.
Two of the four components weakened against the greenback, led by a 0.20 percent decline in the Euro, while the Japanese Yen gained another 0.38 percent ahead of the Bank of Japan interest rate decision. Although the BoJ is widely expected to maintain its current policy in April, the central bank may show an increased willingness to expand monetary policy further as it pledges to meet the 1 percent target for inflation. As the BoJ continues to carry out its easing cycle, the divergence in the policy outlook should prop up the USDJPY, and we may see the pair resume the advance from earlier this year as the fundamental outlook for the world’s third-largest economy remains weak.

** Australian Dollar Vulnerable as Data, Technicals Imply Weakness

Fundamental Forecast for Australian Dollar: Bearish

• AUD/USD Classical Technical Report 04.06
• AUD Slammed by RBA Outlook- NZD Resilience Here toStay?
• AUDUSD: Pullback May Offer Short Trade Entry

The Australian dollar was off by 0.32% this week as a broad-based risk sell-off slammed global markets. European debt concerns have once again come into focus with yields on Spanish debt topping pre-LTRO levels not seen since December. While broader market sentiment has largely remained on the defensive, data out of the Australia this week has had its own impact on the Aussie with our medium-term bias remaining weighted to the downside.
Although the RBA left interest rates unchanged this week at 4.25% as expected, remarks made by Governor Glenn Stevens weighed heavily on the aussie as he noted that while the current policy remains “appropriate,” the board “judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation before considering further steps to ease monetary policy.” The comments fueled speculation for future rate cuts from the RBA with Credit Suisse overnight swaps now factoring in a 90% chance of a 25 basis point cut next month with twelve month expectations calling for more than 80 basis points in additional cuts.
Looking ahead to next week, trader will be closely eyeing data out of Australia with February home loans, consumer inflation expectations, and employment data on tap. Data this week showed building approvals plummet by a staggering 15.2% y/y in the month of February with consensus estimates calling for home loans to decline by another 4% m/m, down from a previous decline of 1.2% m/m. In light of the recent rhetoric form the RBA, investors will be watching Wednesday’s consumer inflation expectation print as the central bank weighs implications for further easing against price stability. Employment data steals the spotlight next week with estimates calling for the addition of just 6.5K jobs with the unemployment rate expected to rise to 5.3% from 5.2%. With persistent weakness in the housing sector and the labor market continuing to weigh on domestic growth prospects, look for the Aussie to remain under pressure as traders begin to factor in further easing from the central bank.
Key data out of China may also have larger implications on the Aussie with March trade balance, industrial production, CPI, PPI, retail sales, and 1Q real GDP on tap next week. As Australia’s largest trade partner, deepening concerns about further slowing in Chinese growth is likely to contribute to weakness in the Aussie as demand for Australian exports wanes. With European sovereign debt concerns coming back into focus, look for fears of a hard landing in the world’s second largest economy to also weigh on broader risk sentiment with a continuation of the risk sell-off seen at the start of the month likely to weigh heavily on higher yielding, growth-linked assets.
From a technical standpoint, the AUDUSD has continued to trade within the confines of a well-defined descending channel formation dating back to the February 29th highs. Key daily support for the pair now rests with the 61.8% Fibonacci retracement taken form the December 15th advance at 1.0240 with a break here eyeing subsequent support targets at the 1.02-figure, 1.0180 and the 2012 low at 1.0145. Should this level be compromised, look for accelerated Aussie losses with extended targets held at the 78.6% retracement at 1.0075. Topside daily resistance stands at the 50% retracement at 1.0360 backed closely by the confluence of the 100 & 200-day moving averages at 1.0388. Only a breach above this level would negate out medium-term bias with such a scenario eying subsequent resistance targets at the 38.2% retracement at 1.0475. With the results of today’s US employment report yet to be digested by broader markets, look for weakness in the high yielder to persist next week with rally’s offering favorable short entries on the AUDUSD. – MB

$ New Zealand Dollar Vulnerable As Debt Fears Resurface

Currency Analyst 07 April 2012 00:34 GMT

Fundamental Forecast for New Zealand Dollar: Bearish

The New Zealand dollar regained its footing going into the holiday trade, but we may see the high-yielding currency come under pressure next week as fears surrounding the sovereign debt crisis drags on risk-taking behavior. Indeed, New Zealand’s reliance on international financing dampens the appeal of the kiwi as the threat for contagion resurfaces, and the ongoing turmoil in the world financial system instills a bearish outlook for the NZDUSD as the region remains vulnerable to external shocks.

The International Monetary Fund said that the Reserve Bank of New Zealand has the scope to lower its benchmark interest rate further ‘to help buffer against a downside scenario,’ and went onto say that the recovery is ‘likely to remain modest’ amid the ongoing slack within the private sector. As the RBNZ sees higher funding costs dragging on the real economy, we are likely to see Governor Alan Bollard maintain a cautious outlook for the region, and the central bank head may continue to talk down speculation for higher borrowing costs in an effort to shield the economy. However, as the central bank remains optimistic about the rebuilding efforts from the Christchurch earthquake, Credit Suisse overnight index swaps continue to reflect expectations for a rate hike in the next 12-months and speculation for a higher interest rate may continue to prop up the New Zealand dollar as market participants weigh the prospects for future policy.

As the NZDUSD maintains the range-bounce price action carried over from the previous month, the kiw

i-dollar should continue to track sideways in the week ahead, but it seems as though a downward trending channel is beginning to stake shape as the pair appears to be carving out a lower top around 0.8250. Should the bearish pattern continue to pan out, we would like to see a close below the 200-Day SMA (0.8096) to favor further declines in the exchange rate, and we may see market participants turn increasingly bearish against the NZDUSD should the shift away from risk-taking behavior gather pace. - DS