Dollar And Yen Rise On Haven Demand, Aussie Sold As PPI Disappoints

By Ilya Spivak, Currency Strategist

Talking Points
  • Eurozone PMIs to Show Manufacturing, Services Sectors Shrank for Third Month
  • US Dollar, Japanese Yen Advance on Safe-Haven Demand as Stocks Decline in Asia
  • Australian Dollar Sold After PPI Misses Expectations, Stoking RBA Rate Cut Bets

The preliminary set of April’s Eurozone PMI readings headlines the calendar in Europe.Economists’ median forecasts suggest the region-widecomposite reading will print at 49.3, yielding thethird-consecutive print below the 50 “boom-bust”threshold and reflecting continued contraction in manufacturing-and service-sector growth. The pace of decline is expected tomoderate a bit compared with the 49.1 result recorded inMarch.

With the outlook for global economic growth infocus as traders size up the ability of a choppy recovery in the USto offset a recession in the currency bloc and slowdown in China,traders’ response to the release ought to be relativelystraight-forward. An upside surprise above the “50”threshold is likely to prove supportive for the Euro as well as risk appetite at large, while adisappointing one can be expected to have the opposite effect.Indeed, in the latter scenario would imply stronger headwinds toworld output as well as greater scope for future ECB policyeasing.

The Japanese Yen and US Dollar outperformed in overnight trade as stocksdeclined, boosting demand for the go-to safe haven currencies. TheMSCI Asia Pacific regional benchmark equity index slid 0.4 percent.The HSBC ChinaManufacturing PMI gauge printed at 49.1 in April, showing thefactory sector shrank for the sixth consecutive month (albeit at aslower pace than in March).

The AustralianDollar bore the brunt of the selloff afterfirst-quarter Producer PriceIndex figures disappointed, showing wholesaleinflation slowed to an annual pace of 1.4 percent. The resultmarked the weakest reading since the second quarter of 2010 andreinforced expectations calling for the RBA to cut interest ratesin May. The markets now price in a 94 percent probability of a25bps reduction in headline borrowing costs (according to datacompiled by Credit Suisse).

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

1:30

AUD

Producer Price Index (QoQ) (1Q)

-0.3%

0.4%

0.3%

1:30

AUD

Producer Price Index (YoY) (1Q)

1.4%

2.2%

2.9%

2:30

CNY

HSBC Flash China Manufacturing PMI (APR)

49.1

-

48.3

5:00

JPY

Supermarket Sales (YoY) (MAR)

-2.4%

-

0.3%

5:00

JPY

Coincident Index (APR F)

95.0

-

93.7

5:00

JPY

Leading Index (APR F)

96.3

-

96.6

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:45

EUR

French Own-Company Production Outlook (APR)

-

6

Low

6:45

EUR

French Production Outlook Indicator (APR)

-

-15

Low

6:45

EUR

French Business Confidence Indicator (APR)

96

96

Low

7:00

CHF

Money Supply M3 (YoY) (MAR)

-

6.4%

Low

7:00

CHF

Real Estate Index Family Homes (1Q)

-

404.6

Low

7:00

EUR

French PMI Manufacturing (APR P)

47.4

46.7

Low

7:00

EUR

French PMI Services (APR P)

50.1

50.1

Low

7:30

EUR

German PMI Manufacturing (APR A)

49

48.4

Medium

7:30

EUR

German PMI Services (APR A)

52.3

52.1

Medium

8:00

EUR

Euro-Zone PMI Composite (APR A)

49.3

49.1

Medium

8:00

EUR

Euro-Zone PMI Manufacturing (APR A)

48.1

47.7

Medium

8:00

EUR

Euro-Zone PMI Services (APR A)

49.3

49.2

Medium

9:00

EUR

Euro-Zone Government Debt/GDP Ratio (2011)

-

85.4%

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3133

1.3232

GBPUSD

1.6053

1.6163

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

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me 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/2012/04/23/Dollar_and_Yen_Rise_on_Haven_Demand_Aussie_Sold_as_PPI_Disappoints.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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