Talking Points
- Risk Appetite Finds Support on Hopes for Coordinated Central Bank Stimulus
- Soft US Economic Data May Spark Risky Asset Liquidation into the Week-End
- Yen Outperforms as BOJ Keeps Policy on Hold, Upgrades Growth Outlook
The Japanese Yen outperformed in overnight trade, rising against all of its leading counterparts after the Bank of Japan opted to keep monetary policy unchanged from its current setting. The bank held the benchmark interest rate at 0.1 percent and kept the size of its asset-purchase fund, the credit-loan program, and monthly JGB purchases at ¥40, ¥30 and ¥1.8 trillion respectively. Policymakers also upgraded their outlook for economic growth, attributing signs of pick-up to rebuilding efforts following last year’s Tohoku earthquake and tsunami. The news boosted the Yen amid receding worries that the BOJ would further dilute the currency in an attempt to reach its 1 percent inflation target.
Risk appetite appears well-supported in late Asian trade following reports thatcentral banks are preparing to step in to stabilize financial marketsif the weekend’s much-feared Greek election outcome generates widespread dislocation. Reuters cited a G20 cited official saying the world’s top monetary authorities would provide liquidity if credit conditions seize up while Bank of England Governor Mervyn King unveiled a credit-easing program meant to feed funding to UK banks set to launch next week.
S&P 500 stock index futures are pointing higher ahead of the opening bell on Wall Street, but the risk of liquidation remains high as traders turn defensive into the close of the trading week. The US economic data docket may prove to be the catalyst for a turn-around in sentiment. The University of Michigan gauge of consumer confidence is expected to tick lower and New York State manufacturing activity slows in June. Industrial Production is likewise forecast to decelerate. Such an outcome promises to reboot demand for haven assets, pushing the US Dollar higher.
Asia Session: What Happened
GMT | CCY | EVENT | ACT | EXP | PREV |
22:30 | NZD | Business NZ PMI (MAY) | 55.7 | - | 48.2 (R+) |
1:00 | NZD | ANZ Consumer Confidence Index (JUN) | 105.8 | - | 113.9 |
1:00 | NZD | ANZ Consumer Confidence (MoM) (JUN) | -7.1% | - | -0.1% |
2:52 | JPY | Bank of Japan Rate Decision (JUN 15) | 0.10% | - | 0.10% |
3:00 | NZD | Non Resident Bond Holdings (MAY) | 61.7% | - | 62.1% |
Euro Session: What to Expect
GMT | CCY | EVENT | EXP | PREV | IMPACT |
6:00 | EUR | EU 25 New Car Registrations (MAY) | - | -6.9% | Low |
8:00 | EUR | Italian Trade Balance – Total (€) (APR) | - | 2065M | Low |
8:00 | EUR | Italian Trade Balance Eu (€) (APR) | - | 1555M | Low |
8:30 | GBP | Total Trade Balance (£) (APR) | -2700 | -2739 | Low |
8:30 | GBP | Trade Balance Non EU (£) (APR) | -4175 | -4109 | Low |
8:30 | GBP | Visible Trade Balance (£) (APR) | -8500 | -8564 | Medium |
9:00 | EUR | Euro-Zone Employment (QoQ) (1Q) | - | -0.2% | Low |
9:00 | EUR | Euro-Zone Employment (YoY) (1Q) | - | -0.2% | Low |
9:00 | EUR | Euro-Zone Trade Balance (€) (APR) | 4.0B | 8.6B | Low |
9:00 | EUR | Euro-Zone Trade Balance s.a. (€) (APR) | 4.2B | 4.3B | Low |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.2571 | 1.2699 |
GBPUSD | 1.5442 | 1.5593 |
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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