News Forex: EURUSD falls below 1.26 as yields soar Spanish

Basic Articles
- Shortages of dollars Seen on $ 2 trillion Gap - Bloomberg
- The heads of Euro sign Greek austerity softening, such as looms Summit - Bloomberg
- Islamists in Egypt demand the presidency that the NEAR army control - Reuters
- Conservatives of Greece begin coalition talks - WSJ
- Overvoltages yields Spanish, Greek Relief Wanes - WSJ
Meeting summary Asia / Europe
Greek elections gave the surprising result of the victory of the New Democracy strong, with the rescue team to get enough votes to be able to form a coalition government with the rescue of the other major party, the PASOK. If this materializes, it will continue to fight the rescue party Syriza outside the main opposition party, but it is only likely to last long. Early reports indicate that PASOK will not form a coalition government without the inclusion of Syriza, whose leader Alexis Tsipras has already said his party will not join the new democracy in a "grand coalition" of all kinds.
In a bit of speculation on how this will develop the Greek drama, as a politician, Mr. Tsipras plays his cards right, because there seems to be in the game for the long term. So if Syriza had to win yesterday would have been only a very narrow margin, which would probably have deteriorated rapidly in case of Greece need another rescue under his command (it will be in about a month ). On the other hand, with a strong presence, Syriza is ready to get the majority support of a few months, when the Greeks return to the polls (assuming that the New Democracy and PASOK to form a government), the coalition of center will not do anything to change the material from the expected path of Greece outside the eurozone.
As a result of Greek elections were digested, it is now clear that the G-20 will not make the nuclear option to flood markets with hundreds of millions of dollars of liquidity to ensure price stability in the coming days. It was most of the reasons why the markets rallied in late last week, and without the promise of greater flexibility, most of the taste after the falling U.S. dollar has been stifled. This "rebound" to reality after the election has dragged on EURUSD from its highest level in three weeks back at 1.2600 1.2747 just before the U.S. equity cash open.
First, no smoothing along the way, investors have thrown in the mass Spanish debt, with the yield of the benchmark 10-year-emerges today 7.285% to 6.840 after the opening %. These are the highest yields of 10 years have seen Spanish since late April 1997. In the short end of the yield curve, the yield of 2-year Spanish note rose higher than 5.592%, its highest level since late November 2011.
Looking at European Credit, Italian debt is well under pressure, with 10-year notes containing 6.057% at the time of writing this report, after rising to 6.173% earlier in the day. The yield was over 10 years to 14 June, when it reached 6.342%. In the short end of the curve, Italian 2-year note rose 18.9 basis points give 4.522%.
Chart EURUSD 5 minutes: 18 June 2012

Lists created by MarketScope - Prepared by Christopher Vecchio

The dollars of Australia and New Zealand are in the day, its appreciation against the dollar by 0.22 percent and 0.34 percent. The Canadian dollar is the worst performer and lost 0.42 percent against the dollar of the United States. Having to 0.88 percent of the trading EURUSD was 0.31 percent lower at the time of writing. USDJPY was a little firmer, gaining 0.22 percent on Monday so far.
24-Hour Price Action

Key Levels: 13:45 GMT


So far, on Monday, the Dow Jones FXCM Dollar (ticker: USD) is trading higher at 10,096.63 at the time of writing, after opening at 10,060.99 (index closed at 10,072, the 32 Friday). The index was mainly driven more in. high and low 10111.05 10060.88

? EU market update: Spanish 10-year yields remain above the level of 6% as many questions about Spain.

Monday, June 11, 2012 5:38:18 AM TradeTheNews.com EU Market Update: Spanish 10-year yields remain above the 6% level as plenty of questions remain regarding Spain.***Economic Data***
- (EU) ECB: ?1.9B borrowed in overnight loan facility vs. ?1.5B prior; ?788.2B parked in deposit facility vs. ?756.6B prior
- (JP) Japan May Consumer Confidence: 40.7 v 39.8e
- (JP) Japan May Preliminary Machine Tool Orders Y/Y: -2.9% v v 0.4% prior
- (FR) France Apr Industrial Production M/M: +1.5% v -0.1%e; Y/Y: +0.9% v -0.3%e >- (FR) France Apr Manufacturing Production M/M: -0.7% v -0.7%e; Y/Y: -1.4% v -0.9%e
- (CZ) Czech May CPI M/M: 0.2% v 0.1%e; Y/Y: 3.2% v 3.1%e
- (DK) Denmark Apr Current Account (DKK): 9.4B v 5.5Be; Trade Balance (ex-shipping): 6.1B v 6.3Be prior
- (DK) Denmark May CPI M/M: 0.0% v 0.0%e; Y/Y: 2.1% v 2.1%e
- (DK) Denmark May CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 2.0% v 2.0%e
- (ES) Spain Apr House transactions Y/Y: -9.9% v -22.7% prior
- (TR) Turkey Apr Current Account: -$5.0B v -$5.0Be
- (IT) Italy Q1 Final GDP Q/Q: -0.8% v -0.8%e; Y/Y: -1.4% v -1.3%e
- (CN) China May M2 Money Supply M/M: 13.2% v 12.8%e; M1 Money Supply M/M: 3.5% v 3.2%e; M0 Money Supply M/M: 10.0% v 10.6%e >- (CN) China May New Yuan Loan (CNY): 793.2B v 700.0Be
- (NO) Norway May CPI M/M: 0.0% v 0.1% prior; Y/Y: 0.5% v 0.3% prior
- (NO) Norway May CPI Underlying M/M: 0.4% v 0.1% prior; Y/Y: 1.4% v 0.7% prior
- (NO) Norway May Producer Prices incl.Oil M/M: -2.1%v -1.6% prior; Y/Y: 2.5% v 2.5% prior
Fixed Income:
- (PH) Philippines rejected all bids in 3-month, 6-month and 12-month Bills
- (SK) Slovakia Debt Agency (ARDAL) sold ?138.0M in 4.35% 2025 Bonds; Avg Yeild 4.2583%; Bid-to-cover: 1.39x
- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 2% 2023 Bonds; Yield 2.16%
- (DE) Germany sold ?3.53B in 6-Month BuBills; Avg Yield 0.0070% v 0.0371% prior; Bid-to-cover: 1.2x v 1.5x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Risk on sentiment prevails following ?100B Spanish banking sector aid agreement; initial impact was waning ahead of the NY morning.
- Components of China Trade Balance (exports/imports) show improvement
- China new Yuan loans shows RRR cuts are working
- Spain 10-year Govt bond unable to sustain sub-6.0% yield in session
- S&P: India may be first of BRICS nation to lose investment grade rating
***Equities*** >Indices: IBEX-35 +3.8% at 6799, FTSE 100 +1.3% at 5505, DAX +2.2% at 6265, CAC-40 +1.9% at 3116, FTSE MIB +1.9% at 13,688, SMI +1.3% at 5943, S&P 500 Futures +0.90% at 1340
- Equity indices opened the session sharply higher amid Spain's decision to seek aid for its banks and better than expected May exports data out of China. The gains for the session have been largely driven by banks in Spain, as some of the country's large financial institutions opened the session higher by over 9%. Spain IBEX-35 is continuing to outperform, as the index opened higher by over 5%. Resource related companies are broadly higher (Xstrata, Rio Tinto and BP are trading higher by approx. 2%) on higher commodity prices. Amid the rebound in the European equity markets and announcement related to Spain, corporate bond market activity has picked-up on the session. Companies speculated to issue bonds in the near-term include Accor [AC.FR], France Telecom [FTE.FR], GE Capital, Swedbank [SWEDA.SE] and Volkswagen [VOW3.DE].
- Shares of Tesco [TSCO.UK] are trading off of the best levels for the session, following the release of the firm's Q1 sales figures. Tesco also reaffirmed its FY targets, as it noted that consumer confidence levels in the UK have been largely stable. Engineering and construction services firm Severfield-Rowen [SFR.UK] has lost over 10% after issuing a profit warning, while Mouchel [MCHL.UK] is lower by over 25%, as the firm disclosed that strategic options being considered might result in only limited value for existing shareholders. In France, Technicolor [TCH.FR] has gained over 4%, after rejecting a ?1.90/share offer from JP Morgan. Porsche [PAH3.DE] is trading higher by ~4%, as a German press report said the company might be able to avoid paying ?1.5B in taxes, as part of its merger with Volkswagen. Amid the story related to Porsche, shares of Volkswagen have risen by ~3.5%. Additionally, a separate press report said that Volkswagen is said to be planning to raise its Chinese production by approx. 100% in the next few years.
Speakers: >- Spain Treasury commented that details of bank sector aid yet to be established but the plan did include buffers on top of worst case scenarios. The dept reiterated its view that its funding program would not be changed
- EU's Almunia: Believes ?100B aid would be enough for Spain; Bailout to include conditions; interest rate and timing not yet determined
- EU Commission Official Altafaj commented that the loan to Spain might have avg interest rates of 3-4%. The agreement should not impact Spain's deficit, but would impact its indebtedness. Loan to have strict conditions related to the overhaul of Spain's banking sector but the amount of the loans might not reach ?100B level
- Moody's commented that developments in Spain and Greece might prompt Euro Area sovereign rating downgrades
- Portugal PM Coelho: No reason to ask for new conditions for Portugal's financial aid program following the rescue request for Spanish banks
- Finland Fin Min Urpilainen stated that Finland would demand collateral or its share of emergency loans to shore up the Spanish banking system if aid comes from EFSF facility
- ECB Constancio urged accountants to adopt a long-term view to risks as focusing on shareholder volume provideed only short-term perspective. Fair value accounting could be "Outright wrong" and that current provisioning methodology was a risk to financial stability
- JP Morgan commented on Spain: Country's debt to GDP ratio would jump to around 90% from 81% if the entire ?100B package is used
- Germany Public Banking Assoc official Voeb commented that the sovereign debt crisis was heightening and putting earnings under pressure. The Spain banking sector bailout would help stabilize markets
- S&P commented on China's revised capital rules and noted there were in line with expectations and could push the banking sector to shore up capital
- S&P stated that India might be first of BRICS nation to lose its investment grade rating (**Note: currently at BBB-, outlook negative)
- Japan Govt nominated Takahide Kiuchi and Takehiro Sato as BoJ board members with a parliamentary vote expected mid-week
- Thailand Central Bank reiterated its view that it no need to take any action in FX markets at this time as recent THB currency (Baht) volatility was caused by external factors and that most capital inflows detected were short term
- OPEC President commented that there was a tremendous surplus in oil market but rejected idea of quota system at this stage. Iraq planned 2.9M bpd exports in 2013 vs. 2.4M bpd currently and saw $100-120/barrel as a reasonable price. Iraq was not substituting Iranian production at this time
Currencies:
- Relief and reversing of safe-haven flows characterized the early part of today's session but dealers still had plenty of questions regarding Spain. Thus the markets still needed to be convinced that the weekend agreement was not just a bunch of headlines masking the core problem before Greek election. Key points including where money would come from and in what form it would take (Cash or bonds). Also which banks still to be determined? Overall dealers noted that contingent liabilities were now way higher nonetheless.
The Spanish 10-year Govt bond yield briefly dipped below the 6.0% for the first time in almost a month but could not sustain the momentum to hold that level.
- Swiss names were said to be once again behind the soft tone in Euro after the open with renewed chatter circulating that the SNB might be legging out of the Euros accumulated from its defense of the EUR/CHF floor at 1.2000. The EUR/USD hovered below the pivotal 1.2630 level throughout the European morning after a test above during Asia.
Political/ In the Papers:
- Certain Greek energy companies were reported to have been seeking to obtain emergency bank loans in order to pay suppliers and prevent power cuts.
- The Telegraph's Ambrose Evans-Pritchard anticipated the ?100B bailout for Spanish banks as a loan package to the sovereign state of Spain will raise the country's public debt by up to 10% of GDP. In addition, the rescue package is less than some market estimates; JP Morgan said Spain requires ?350B; RBS placed the estimate at ?450B.
- Comments made by JP Morgan analyst expects the Spanish debt to GDP ratio would jump to around 90% from 81% if the entire ?100B package were to be used. This compares to forecasts made by Spain in April where it forecasted the 2012 debt/GDP ratio at 79.8% vs. 68.5% y/y
- The French President Hollande and his party moved closer to securing the majority needed to govern France with first round results predicting the Socialists and other leftists will take a majority of the 577 seats in the National Assembly in the second round on the 17th June. Four polling agency projections and early official results show diminished support for former President Nicolas Sarkozy's conservative UMP party across the country. They show growing support for the left, amid anger at cost-cutting austerity measures and reforms under Sarkozy seen by some as too friendly to the rich.
- According to the Populus poll 80% of the British population support a European referendum. A third support a referendum in the next few years compared to the 18% seeing no need for one in the foreseeable future.
- In a report released by Deutsche Bank the Irish housing market is expected to continue to be significantly oversupplied. The vacancy rate is at 15% with over 289K empty houses (including approx 60k vacant holiday homes). According to the bank, if current population trends are sustained, housing oversupply will take 43 years to clear.
***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (ES) IMF report on Spain's banking sector
- (DE) German Chancellor Merkel attends event honoring Frankfurt Mayor Roth
- (PT) Bank of Portugal Releases Data on Banks
- 6:00 (PT) Portugal Apr Trade Balance: No est v -?842M prior
- 6:00 (EU) Apr Leading Indicators: No ets v 100.4 prior
- 7:00 (IE) Ireland May Consumer Confidence: No est v 62.5 prior
- 7:30 (FI) IMF review of the Finland
- 7:30 (BR) Brazil Central Bank Weekly Economists Survey
- 8:00 (RO) Romania to sell 12-Month Bills
- 9:00 (MX) Mexico Apr Industrial Production M/M: 0.6%e v 1.5% prior; Y/Y: 4.8%e v 3.1% prior
- 9:00 (MX) Mexico Apr Final Trade Balance: $560Me v $560.2M prelim
- 9:00 (FR) France Debt Agency (AFT) to sell between ?7.8B in 3-month, 6-month and 12-month bills
- 9:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 9:30 (EU) ECB calls for bids in in 1-Month Tender
- 9:30 (EU) ECB announces weekly settlements in its Govt Bond Purchase program
- 11:00 (MX) Mexico May Vehicle Production: No est v 206.4K prior; Vehicle Domestic Sales: No est v 69.9K prior; Vehicle Exports: No est v 168.9K prior
- 11:00 (US) Fed to sell $1.00-1.50B in Notes
- 11:30 (US) Treasury to sell $30B in 3-Month and $27B in 6-Month Bills
- 12:00 (EU) EU's Rehn speaks at European Parliament in Strasbourg, France
- 12:00 (US) Fed's Lockhart speaks on U.S. Economy in Chicago
- 12:00 (US) Fed's Williams delivers opening remarks in San Francisco
- 13:45 (CA) Bank of Canada's Carney gives intro at Montreal Conference
- 18:00 (US) Fed's Pianalto speaks on Improving Educational Attainment
- 20:00 (JP) BOJ Governor Shirakawa speech to San Francisco Fed. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing. Daily Forex 

##Commodity Currencies Lead as Euro Lags amid Rising Spanish Yields

Key Levels: 14:05 GMT
12 June 2012 14:12 GMT Fundamental Headlines
- Fed Says US Wealth Fell 38.8% in 2007-2010 on Housing – Bloomberg
- Prices of US Goods Imports Decrease by Most in Two Years – Bloomberg
- Rebels try to Evacuate Residents of Syria’s Haffeh – Reuters
- Spain Banks Face Europe’s Scrutiny – WSJ
- Spanish, Italian Yields Leap Higher – WSJ
Asian/European Session Summary
Yesterday’s price action was very technical: high beta and risk-correlated assets hit overbought short-term levels at the open in Asia and finished the day at their daily lows by the end of the US session. The intraday swing was indeed enormous, with the S&P 500 falling approximately 2.40 percent from its overnight high in the futures market, marking the single largest one day swing by the benchmark index in 2012 thus far.
However, at the start of Asian trading some hopeful comments by various global policymakers or at least financial industry officials buoyed risk-appetite enough to catapult higher yielding currencies and risk-correlated assets throughout the overnight sessions. Federal Reserve pema-dove Charles Evans quipped (unabashedly) that he is in favor of “any accommodative policy,” and that extending Operation Twist and expanding asset purchases would be “useful” for the US economy. With market participants desperate for whatever easing they can get, such blind devotion to a looser monetary policy has spurred risk-appetite.
Also boosting risk-appetite were comments by the International Swaps and Derivatives Association (finance industry official, essentially), saying that not only would the Spanish bailout not trigger subordination, but it would not trigger the sovereign credit default swaps (CDS) either – no CDS trigger means that there won’t be a liquidity drawdown in the near-future, which spurred investors to shed their lower yielding currencies such as the Japanese Yen and the US Dollar.
With the Euro-zone crisis on fire and the Chinese growth picture seemingly more stable after this weekend’s data – mainly on a much stronger than expected Trade Balance figure (which doesn’t seem to fit in with trade data from China’s largest trading partners, but markets are generally ignoring this point so it’s neither here nor there) – the commodity currencies have the impetus to continue their recovery after a brutal May. Accordingly, the Australian, Canadian, and New Zealand Dollars have been the top performing currencies thus far on Tuesday.
Taking a look at credit, pressure is on across the Euro-zone, not just in the periphery anymore. Italian and Spanish bonds are showing the most distress (save Greece), with their respective 10-year note yields climbing to 6.210 percent and 6.707 percent. In fact, the Spanish 10-year note yield hit its highest level since November 28 – a clear indication that the bailout has failed. Broadly speaking, the 7 percent yield on the 10-year note appears to be the threshold for a bailout from the European Troika, as it was at that level Greece, Ireland, and Portugal started exploring options for international help.
EURUSD 5-min Chart: June 12, 2012

Charts Created using Marketscope – Prepared by Christopher Vecchio
The New Zealand Dollar has been the top performing currency today, gaining 0.77 percent against the Euro and the US Dollar. The Australian and Canadian Dollars are also up against the Euro and the US Dollar, appreciating by 0.58 percent and 0.37 percent, respectively, against each. Accordingly, the EURUSD is unchanged on the day, but only after trading in a 0.64 percent range from its daily low to high.
24-Hour Price Action

Key Levels: 14:05 GMT


Thus far, on Tuesday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading lower, at 10197.62 at the time this report was written, after opening at 10214.83. The index has traded mostly lower, with the high at 10220.10 and the low at 10182.60.

:: EURUSD Drops to Lowest Level Since Mid-January as Yields Spike

Fundamental Headlines
- Dimon Fortress Breached as Push from Hedging to Betting Blows up – Bloomberg
- Moody’s Said to Delay Bank Downgrades amid Crisis, JPMorgan Loss – Bloomberg
- Greece Hits Political Stalemate, Euro Exit Fears Grow – Reuters
- China May Give Foreign Pension Funds New Investment Opportunities – WSJ
- Economists Forecast Subdued Growth in 2012 – WSJ
European Session Summary
What is the biggest problem in the market right now: Is it the Chinese growth picture? Is it the Euro-zone growth picture or the Greek political impasse? Or is it the Federal Reserve’s outlook for the US Dollar? In a sense, there is only one link that unifies these three macroeconomic issues: uncertainty. Uncertainty – a lack of clarity, having little knowledge of “known knowns” with deep fears of “unknown unknowns,” however you want to describe it – is what’s driving the Euro’s fastest rate of depreciation in over a month.
When considering how great this uncertainty is, one needs to look no further than this weekend to understand how shaken investors have become. The People’s Bank of China cut their reserve-requirement ratio (RRR) by 50-basis points on Saturday, reducing their key rate from 20.50 percent to 20.00 percent. Historically, when this has happened, the commodity currencies have rallied sharply in the ensuing trading sessions, with the Australian Dollar benefiting the most (the last time the RRR was cut, the weekend of February 18, the AUDUSD opened up the next week approximately 100-pips higher). However, this was not the case; in fact, the AUDUSD opened up slightly lower as US Dollar demand has soared amid the uncertainty surrounding the market.
With that said the information that market participants do know is not conducive to an atmosphere of risk-appetite. Greece’s political situation is gridlocked with recent polls suggesting that Syriza, the left-wing anti-bailout party, would receive the most amount of support should another round of elections be announced. This in turn has raised concerns that Greece could leave the Euro-zone entirely, as European leaders have made it clear that if Greece reneges on any of its commitments, then the country won’t receive anymore funds. German Chancellor Angela Merkel hasn’t helped soothe investor sentiment, saying today that Greece will “always” remain as an European Union member, a sign that she believes that Greece may not always be part of the Euro-zone.
Taking a look at credit, the flight to safety is in full throttle, with the US 10-year Treasury Note yield falling to 1.771 percent; its German counterpart saw its yield drop to 1.438 percent. Euro-zone funding concerns are most evident on the shorter-end of the curve, with Irish, Italian, Portuguese, and Spanish 2-year note yields soaring: these yields climbed to 5.200 percent, 3.289 percent, 6.831 percent, and 3.894 percent, respectively. To this end, Irish and Spanish 2-year notes are trading at their highest yield (lowest price) in over three-months.
EURUSD 5-min Chart: May 14, 2012

Charts Created using Marketscope – Prepared by Christopher Vecchio
The Japanese Yen has been the top performer, gaining 0.24 percent against the US Dollar. The British Pound has been exceptionally resilient, gaining 0.02 percent as well as the Sterling is benefiting from haven flows and a relatively hawkish central bank. The Euro has underperformed broadly, with the EURUSD shedding 0.67 percent and trading to its lowest level since January 18.
24-Hour Price Action

Key Levels: 12:50 GMT

Thus far, on Monday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading higher, at 10041.67 at the time this report was written, after opening at 10021.41. The index has traded mostly higher, with the high at 10049.70 and the low at 10019.28

USDJPY Needs Higher Treasury Yields for Gains to ¥85, Eyes on US Fed

Strong correlations between US Treasury Yields and the US Dollar/Japanese Yen pair suggest that US interest rates and Federal Reserve Monetary Policy will decide whether the USDJPY continues its recent gains.
Last month we argued that the US Dollar/Japanese Yen pair had set a long-term bottom on a simultaneous surge in US Treasury Yields. It’s too early to tell whether we were correct in our forecasts, but sharp USDJPY gains suggest fresh lows are unlikely. Yet the US 10-Year Treasury Note yield trades almost squarely at critical support at its 200-day Simple Moving Average.
Whether or not US Treasury Yields rally off of major support may ultimately decide if the USDJPY makes a sustained run towards ¥85.
Forex Correlations Summary
View forex correlations to the SPDR Gold ETF Trust (GLD), United States Oil Fund ETF (USO), SPDR Dow Jones Industrial Average ETF Trust (DIA), UK FTSE 100 Index, and IShares Silver Trust ETF (SLV) prices.
US Dollar/Japanese Yen Exchange Rate (lhs)
US 2-Year Treasury Note Yield (VIX) (rhs)
Correlation between US Dollar/Japanese Yen and US 2-Year Treasury Note Yield
The correlation between the US Dollar/Japanese Yen and US Treasury Yields remains strong, and the noteworthy link suggests that yields will have to rise further for similar USDJPY strength. Several weeks ago we argued that the USDJPY had set a major bottom on a similar floor in US Treasury Yields. And obviously we can’t know for certain that both Treasury yields and the USDJPY have bottomed, but sharp rallies suggest fresh lows are unlikely.
Yet the USDJPY rally has stalled just short of 2011 highs near ¥85, and recent forex futures positioning warns that the pair could correct lower. The ultimate driver of US Dollar moves against the Yen may nonetheless come on Treasury Yields, and indeed this leaves focus on the US Federal Reserve and its next monetary policy moves.
Keep a close eye on Federal Reserve rhetoric and this week’s pivotal US Nonfarm Payrolls report. Given the strongest quarterly performance in the Dow Jones Industrial Average since Q1, 1998, Friday’s NFP data could decide the fate of the US Dollar and other highly-correlated markets.
For the USDJPY? Any sharply worse-than-expected NFP data would likely sink the US Dollar versus the resurgent Yen.