Dollar, Yen Aim Higher as All Eyes Turn to Eurozone FinMin Summit

DailyFX

The safe-haven US Dollar and Japanese Yen rose overnight amid risk aversion before a Eurozone finance ministers’ summit. More of the same appears likely ahead.

Talking Points

  • US Dollar, Japanese Yen Rise as Risk Aversion Grips Asian Stock Markets
  • Canadian Dollar Well-Supported in the Wake of US Employment Report
  • Eurozone FinMin Summit in Focus for Greece Funding, Spain Bailout Cues
  • IMF Likely to Downgrade Global Economic Outlook in Updated Data Set
  • Germany’s Trade Surplus Set to Narrow, Industrial Production to Decline

The US Dollar and Japanese Yen advanced against most of their major counterparts as Asian stocks declined, boosting demand for the go-to haven currencies. Regional bourses (excluding Japan, where markets are closed for a holiday) slumped 0.9 percent on average. The Canadian Dollar was likewise well-supported in the wake of Friday’s better-than-expected US jobs report as traders wagered that a firming recovery in the world’s top economy will boost cross-border demand for its northern neighbor.

From here, all eyes turn to the Luxembourg, where Eurozone finance ministers are due to begin a two-day meeting to discuss debt management efforts. Traders will be interested in any moves to mend disagreements between the Greek government and troika monitors that open the door for disbursement of the latest batch of bailout funding. Any clues about the timing of a Spanish request for a full-on rescue package are also sought, particularly after borrowing costs rose at a bond auction last week.

Against this backdrop, the IMF is due to release an updated set of global economic performance expectations, with downgrades widely expected. This suggests that absent concrete positive cues from Luxembourg, the risk-off mood is likely to carry forward. On the data front, Germany’s Trade Balance surplus is expected to narrow to €15.2 billion – the lowest in four months – while Industrial Production is forecast to have fallen 0.6% percent in August.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:01

GBP

Lloyds Employment Confidence (SEP)

-49

-

-43

0:30

AUD

ANZ Job Advertisements (MoM) (SEP)

-2.8%

-

-2.4% (R-)

1:00

NZD

REINZ Housing Price Index (MoM) (SEP)

0.6%

-

1.3%

1:00

NZD

REINZ House Sales (YoY) (SEP)

8.0%

-

16.2%

1:00

NZD

REINZ Housing Price Index (SEP)

3442.1

-

3420.1

2:30

CNY

HSBC Services PMI (SEP)

54.3

-

52.0

5:30

AUD

Foreign Reserves (A$) (SEP)

44.9B

-

44.1B

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

5:45

CHF

Unemployment Rate s.a. (SEP)

3.0%

2.9%

Low

5:45

CHF

Unemployment Rate (SEP)

2.8%

2.8%

Medium

6:00

EUR

German Current Account (€) (AUG)

12.7B

12.8B

Low

6:00

EUR

German Exports s.a. (MoM) (AUG)

-0.6%

0.4%

Low

6:00

EUR

German Imports s.a. (MoM) (AUG)

0.2%

0.7%

Low

6:00

EUR

German Trade Balance (€) (AUG)

15.2B

16.9B

Medium

6:30

EUR

French Bank of France Business Sentiment (SEP)

91

93

Low

7:15

CHF

Consumer Price Index (MoM) (SEP)

0.3%

0.0%

Medium

7:15

CHF

Consumer Price Index (YoY) (SEP)

-0.4%

-0.5%

Medium

7:15

CHF

CPI - EU Harmonised (MoM) (SEP)

-

-0.3%

Low

7:15

CHF

CPI - EU Harmonised (YoY) (SEP)

-

-0.5%

Low

8:30

EUR

Euro-Zone Sentix Investor Confidence (OCT)

-20.9

-23.2

Low

10:00

EUR

German Industrial Production (YoY) (AUG)

-1.6%

-1.4%

Medium

10:00

EUR

German Industrial Production (MoM) (AUG)

-0.6%

1.3%

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2881

1.3080

GBPUSD

1.6065

1.6194

--- 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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