US Dollar Gains On Haven Demand In Asia, Bernanke In Focus Ahead

By Ilya Spivak, Currency Strategist

Talking Points
  • Dollar, Yen Rise as US Jobs and Chinese CPI Data Spark Risk Aversion
  • Emerging QE3 Hopes May Weigh on Dollar, Bernanke Speech in Focus

The US Dollar and Japanese Yen rose against their major counterparts to startthe trading week as stocks declined, boosting demand for the go-tosafe haven currencies. The MSCI Asia Pacific regional benchmarkindex slid 0.6 percent as investors reacted to Friday’sdisappointing US employment report that showed the world’s top economy addedjust 120,000 jobs in March, falling short of the 205,000 increaseexpected.

A larger-than-forecast increase in Chinese CPI also contributed to the sour mood. The annualinflation rate accelerated to 3.6 percent, topping forecasts for aprint at 3.4 percent and hinting Beijing will not be quick to offeradditional stimulus as the economy’s crucial export sectorfaces headwinds from a burgeoning recession in theEurozone.

Looking ahead, top European markets are closedfor the Easter Monday holiday but early indications point tocontinued risk aversion as Wall Street comes online. S&P 500 stockindex futures are down nearly a full percentage point,suggesting selling pressure will carry forward as North Americantraders get their first real chance to react to Friday’s jobsnumbers (only futures markets were open in the immediate aftermathof the announcement, and only very briefly ).

While the risk-off mood proved supportive for the greenback in Asian trade, it is unclear how the Dollar will fare going forward if the outcome meaningfully rekindles QE3 expectations. Near-term correlation studies suggest the benchmark currency has become increasingly correlated with 2-year Treasury yields recently, a development that makes sense in the context of upgraded Fed rhetoric on the prospects for recovery that emerged in officials’ public commentary and with the March FOMC policy meeting. This means that if yields decline as traders mull the possibility of new efforts monetary stimulus efforts, the Dollar may follow suit.

With relatively little on the US economiccalendar, markets are likely to look scheduled comments from FedChairman Ben Bernanke to get their bearings. The central bank chiefwill be speaking at the 2012 Financial Markets Conference in Georgia, and while the topic of conversationis expected to a lecture on "Fostering Financial Stability" , some mention of Friday’s jobs reportmay certainly make an appearance. With that in mind, traders willbe keen to dissect Bernanke’s commentary for any clues as towhether the announcement has made QE3 any more of apossibility.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Current Account Total (¥) (FEB)

1177.8B

1120.0B

-437.3B

23:50

JPY

Adjusted Current Account Total (¥) (FEB)

854.1B

650.0B

135.2B (R+)

23:50

JPY

Current Account Balance (YoY) (FEB)

-30.7%

-34.1%

-180.0%

23:50

JPY

Trade Balance - BOP Basis (¥) (FEB)

102.1B

104.3B

-1381.6B

1:30

CNY

Producer Price Index (YoY) (MAR)

-0.3%

-0.3%

0.0%

1:30

CNY

Consumer Price Index (YoY) (MAR)

3.6%

3.4%

3.2%

4:30

JPY

Bankruptcies (YoY) (MAR)

-1.9%

-

5.2%

5:00

JPY

Eco Watchers Survey: Current (MAR)

54.8

46.5

45.9

5:00

JPY

Eco Watchers Survey: Outlook (MAR)

49.7

-

50.1

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

No Data

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3028

1.3126

GBPUSD

1.5832

1.5931

--- 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/2012/04/09/US_Dollar_Gains_on_Haven_Demand_in_Asia_Bernanke_in_Focus_Ahead.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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