Yen Gains on China Data and BOJ Bets, FOMC Minutes Ahead

DailyFX

The Japanese Yen advanced after China’s exports fell while the BOJ its policy meeting. The US Dollar may fall on June’s FOMC minutes and Bernanke commentary.

Talking Points

  • Japanese Yen Gains on China Exports Miss, BOJ Meeting Speculation
  • US Dollar Volatility Risk on the Downside on FOMC Minutes, Bernanke

The Japanese Yen outperformed in overnight trade, rising as much as 0.8 percent against its leading counterparts. The move higher began as carry trades funded in terms of the perennially low-yielding currency came under pressure following disappointing Chinese Exports data. Overseas sales unexpectedly fell 3.1 percent, producing the worst reading since October 2009.

Speculation about the outcome of the Bank of Japan (BOJ) monetary policy meeting may have lent added support. Japanese economic data has increasingly outperformed relative to expectations over recent months and investors may be speculating that the central bank will opt not to increase stimulus efforts when the outcome of the sit-down is unveiled tomorrow.

A quiet economic calendar in European trading hours is likely to see investors looking ahead to the release of minutes from June’s FOMC policy meeting. The June policy meeting was accompanied by a press conference that cemented the likelihood of “tapering” the size of Fed asset purchases at some point this year, which has already generated a substantial response from financial markets. With that in mind, surprise risk seems to be on the dovish side of the spectrum, with the US Dollar likely to decline if rhetoric found in the minutes or a subsequent speech from Fed Chairman Ben Bernanke serves to trim QE reduction bets.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Domestic CGPI (MoM) (JUN)

0.1%

0.0%

0.0%

23:50

JPY

Domestic CGPI (YoY) (JUN)

1.2%

1.2%

0.5%

23:50

JPY

Tertiary Industry Index (MoM) (MAY)

1.2%

0.7%

-0.5%

0:30

AUD

Westpac Consumer Confidence (JUL)

-0.1%

-

4.7%

0:30

AUD

Westpac Consumer Confidence Index (JUL)

102.1

-

102.2

2:00

CNY

Trade Balance ($) (JUN)

27.12B

27.80B

20.42B

2:00

CNY

Exports (YoY) (JUN)

-3.1%

3.7%

1.0%

2:00

CNY

Imports (YoY) (JUN)

-0.7%

6.0%

-0.3%

5:00

JPY

Consumer Confidence Index (JUN)

44.3

45.6

45.7

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

6:00

EUR

German CPI (MoM) (JUN F)

0.1% (A)

0.1%

High

6:00

EUR

German CPI (YoY) (JUN F)

1.8% (A)

1.8%

High

6:00

EUR

German CPI - EU Harmonised (MoM) (JUN F)

0.1% (A)

0.1%

Medium

6:00

EUR

German CPI - EU Harmonised (YoY) (JUN F)

1.9% (A)

1.9%

Medium

6:45

EUR

French Industrial Production (MoM) (MAY)

-0.4% (A)

2.2%

Low

6:45

EUR

French Industrial Production (MoM) (MAY)

0.4% (A)

-0.5%

Low

6:45

EUR

French Manufacturing Production (MoM) (MAY)

-1.1% (A)

2.6%

Low

6:45

EUR

French Manufacturing Production (MoM) (MAY)

-0.8% (A)

-0.3%

Low

8:00

EUR

Italian Industrial Production (MoM) (MAY)

0.3%

-0.3%

Low

8:00

EUR

Italian Industrial Production wda (YoY) (MAY)

-

-4.6%

Low

8:00

EUR

Italian Industrial Production nsa (YoY) (MAY)

-

-0.1%

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.2725

1.2868

GBPUSD

1.4793

1.4960

--- 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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