Yen Soars As China Sets Soft GDP Goal, Stoking Global Slowdown Fears

By Ilya Spivak, Currency Strategist

Talking Points
  • Yen Soars as China Drops 2012 GDP Growth Target Below 8 Percent
  • Softer Services PMI/ISM Readings to Reinforce Global Slowdown Fears
  • Dallas Fed’s Fisher May Boost Risk Aversion with Anti-QE3 Rhetoric

The Japanese Yen soared overnight, adding as much as 0.9 percenton average against its leading counterparts, as a selloff acrossAsian bourses stocked safe-haven demand. The MSCI Asia Pacificregional benchmark stock index sank after Chinese Premier WenJiabao said his country will officially target a GDPgrowth rate of 7.5 percent in 2012. This marks the lowest goalsince 2004 and – if achieved – would amount to theweakest performance since 1990. The US Dollar likewise rose against overtly growth-linkedcurrencies including its Australian, Canadian and New Zealandnamesakes but performance was mixed against the other non-Yenmajors.

Looking ahead, global slowdown concerns appearlike to remain in focus. UK ServicesPMI is expected to print lower in February,snapping a three-month winning streak. The analogous US ISMNon-Manufacturing Composite gauge is likewise expected to pull back overthe same period after hitting an 11-month high in January. Futurestracking the benchmark S&P 500 stock index – a proxy for overallsentiment trends – are pointing sharply lower to suggest riskaversion remains the dominant theme across the markets. A speechfrom Dallas Fed PresidentRichard Fisher on “The State of the Economy” mayalso prove market-moving, particularly if the remarks echo themoderation in dovish rhetoric seen in Ben Bernanke’stestimony last week. Against the current backdrop, further evidencethat a QE3 program is becoming increasingly unlikely would probablyamplify risk-averse tendencies.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Net Migration s.a. (JAN)

-650

-

-530 (R-)

21:45

NZD

Value of All Buildings (4Q)

2.9%

2.0%

-1.6% (R+)

22:30

AUD

AiG Performance of Service Index (FEB)

46.7

-

51.9

23:30

AUD

TD Securities Inflation (MoM) (FEB)

0.1%

-

0.2%

23:30

AUD

TD Securities Inflation (YoY) (FEB)

2.0%

-

2.2%

0:01

GBP

Lloyds Business Barometer (FEB)

1

-

-11

0:30

AUD

Company Operating Profit (QoQ) (4Q)

-6.5%

0.0%

4.8%

0:30

AUD

Inventories (4Q)

1.4%

0.3%

-1.1%

0:30

AUD

ANZ Job Advertisements (MoM) (FEB)

3.3%

-

7.5% (R+)

2:30

CNY

China HSBC Services PMI (FEB)

53.9

-

52.5

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:15

CHF

Retail Sales (Real) (YoY) (JAN)

-

0.6%

Low

8:45

EUR

Italian PMI Services (FEB)

45.2

44.8

Low

8:50

EUR

French PMI Services (FEB F)

50.3

50.3

Low

8:55

EUR

German PMI Services (FEB F)

52.6

52.6

Medium

9:00

EUR

Euro-Zone PMI Composite (FEB F)

49.7

49.7

Medium

9:00

EUR

Euro-Zone PMI Services (FEB F)

49.4

49.4

Medium

9:00

EUR

Italy PPI (YoY) (JAN)

3.4%

4.0%

Low

9:00

EUR

Italy PPI (MoM) (JAN)

0.6%

0.1%

Low

9:30

GBP

PMI Services (FEB)

54.9

56

Medium

9:30

EUR

Euro-Zone Sentix Investor Confidence (MAR)

-5

-11.1

Low

9:30

GBP

Official Reserves (Changes)

-

$2477M

Low

10:00

EUR

Euro-Zone Retail Sales (MoM) (JAN)

-0.1%

-0.3%

Medium

10:00

EUR

Euro-Zone Retail Sales (YoY) (JAN)

-1.5%

-1.3%

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3093

1.3292

GBPUSD

1.5732

1.5926

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/03/05/Yen_Soars_as_China_Sets_Soft_GDP_Goal_Stoking_Global_Slowdown_Fears.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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