Japanese Yen Rallies After Bevy of Disappointing US Data

Japanese Yen Rallies After Bevy of Disappointing US Data
THE food: USD existing home sales (JUN) > 4,37 M (5.4%) compared to 4.62 M (+ 1.5%) expected from 4.62 M (0.0%) > USD leading indicators (JUN) > 0.3% vs. 0.1% expected by + 0.4% > USD Philadelphia Fed index (JUL) > 12.9 to 8.0 expected from 16.6 > EURUSD BEARISH
The news always worse for the U.S. economy, since a few months ago was world economy the favourite and is now only a further decay in the photo, the global growth. Three 'medium' importance (after the DailyFX economic calendar) data releases for the US economy have been released, disappointed by 10: 00 am EDT / 14: 00 GMT, and all three. Namely:
Existing home sales for June fell to an annual rate of 4,37 m from 4.62M, well-below 4.62 M pace expected. Sales fell by 5.4% over month while a gain of 1.5% was planned. Leading indicators for June shrank by 0.3%, faster than the 0.1% forecast fall in. The July Philadelphia Fed index improved, but remained the stretched compared to 8.0 expected negative to 12.9. The data come measures to improve the growth prospects at a crucial time, as the Federal weighs reserve more stimuli, but remain questions about what exactly is going to happen. Each Chairman Ben Bernanke was as made clear over the last two days half-yearly report on monetary policy to Congress, while the Federal can do more reserve, if necessary, the necessary structural improvements in the economy will come only through a prudent fiscal policy. To the United States ' said that fiscal policy is corrected, the US economy will continue to fight, no matter what does the Federal Reserve. USD/JPY 1 minute chart: 19 July 2012
Charts created using MarketScope prepared by Christopher Vecchio
Following the bevy of disappointing versions of the US dollar initially strengthened, the AUDUSD send lower from 1.0422 to as low as 1.0401, before recovering to 1.0417, which was written at the time of this report. The EURUSD behaved as well as diving from 1.2244 to 1.2230.
The big winner was the Japanese yen, as investors shed the US dollar as the play favorite safe haven: the AUDJPY fell from 81.97 to as low as 81.73; the EURJPY dropped from 96,27 to as low as 96.13; and the USDJPY fell to 78.52 of 78,64, before recovering to 78.57, at the time of this report was written.

:: Disappointing Data Encourages Risk Aversion as Greece Remains in Spotlight

FOCUS:
*Eurozone industrial production weak in April
*Italian inflation as expected
*Greek headlines continue to suggest political instability, friction with EU
*Euro looks to North American open for possible rally
A rough session for economic data drew to a close today as weak Eurozone data dented confidence in the single currency. April industrial production was weaker than expected on all fronts, despite upward revisions to the previous figures.
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The numbers underscored the Eurozone’s deep-rooted growth issues, as the region’s leaders attempt to juggle lagging growth, burdensome sovereign debt, and inflation’s ever-increasing threat.
Meanwhile, Italian inflation numbers and other minor economic releases were as expected. Italy remains beset by austerity measures imposed by the German-dominated European Union. The latest steps out of Rome are intended to reduce unsustainable Italian debt levels, but have also negatively affected consumer confidence.
Fundamental focus remained on Greece as the verbal battle between Athens and EU paymaster Germany escalated. In a last-ditch effort to form a government, the leader of the Greek left-wing Syriza party today requested meetings with the leaders of all parties. The leader of moderate-left party Kouvelis has stated he will not take part in a coalition government without the Syriza party.
German Finance Minister Schaeuble today called Greece’s current situation “dreadfully difficult,” adding that the ECB can’t keep the Euro stable using monetary policy alone.
European bond spreads widened today as the negative headlines highlighted the global risk-off mood. The Euro weakened against the US Dollar, and was seen pressing towards the yearly lows by 1.2625

::$$:: USD Struggles On Disappointing NFPs, EUR To Consolidate On Elections

Talking Points
U.S. Dollar: Non-Farm Payrolls Disappoint, Jobless Rate Contracts Euro: Consolidates Within Bearish Formation - Greek, French Election In Focus British Pound: To Consolidate Ahead Of BoE Interest Rate Decision U.S. Dollar: Non-Farm Payrolls Disappoint, Jobless Rate Contracts
The greenback came under pressure following the dismal Non-Farm Payrolls report, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) paring the overnight advance to 9,922, and the reserve currency may consolidate throughout the North American trade as market participants increase bets for more monetary easing. Indeed, the world’s largest economy added 115K jobs in April following the 154K expansion during the previous month, while the jobless rate unexpectedly slipped to 8.1% from 8.2% as discouraged workers continued to leave the labor force.
Moreover, wage growth slowed during the same period, with the annualized reading falling back to 1.8% from a revised 2.0%, and the slew of weaker-than-expected data may encourage the Fed to carry its easing cycle into the second-half of the year as policy makers look for a stronger recovery. However, as the central bank expects economic activity to gradually gather pace throughout 2012, Fed officials may continue to soften their dovish tone for monetary policy, and the FOMC may start to discuss a tentative exit strategy as growth and inflation picks up. As the USDOLLAR carves out a higher low in May, the short-term rebound in the index should continue to gather pace, and the greenback may continue to retrace the decline from the previous of month as central bank officials become increasingly upbeat towards the economy.
Euro: Consolidates Within Bearish Formation - Greek, French Election In Focus
The Euro snapped back following NFPs, with the EURUSD bouncing back from an overnight low of 1.3120, but we will stick with our bearish forecast for the single currency as the economic docket continues to cast a weakened outlook for the region. As the election in France and Greece come into focus, a shift in leadership may further drag on investor confidence, and we may see the single currency face additional headwinds in the week ahead as the threat for contagion continues to dampen the outlook for the region. As European policy makers struggle to address the risks surrounding the region, fears of a prolonged recession are likely to intensify in May, and we should see the bearish formation in the EURUSD continue to take shape as it carves out a series of lower highs. As price action approaches the apex of the descending triangle, we are looking for a major break to the downside, but the euro-dollar may continue to consolidate in the week ahead as it continues to find support around 1.3000.
British Pound: To Consolidate Ahead Of BoE Interest Rate Decision
The GBPUSD pared the decline to 1.6154 on the back of dollar weakness, but we are still looking for a short-term correction in the exchange rate as the relative strength index continues to come off of overbought territory. As the Bank of England is scheduled to meet next week, we should see the British Pound consolidate ahead of the rate decision, but the central bank may refrain from releasing a policy statement as the Monetary Policy Committee is widely expected to maintain its current policy stance in May. However, as BoE officials take note of the stickiness in underlying inflation, we may see a growing rift within the MPC, and the central bank may ultimately move away from its easing cycle in an effort to restore the credibility on its inflation mandate. Although our near-term bias remains to the upside, we want to see the GBPUSD find support around 1.6000 to see a move higher, and the sterling may mark fresh yearly highs later this month should the BoE Minutes due out on May 23 dampen speculation for more quantitative easing.