US Dollar May Rise Alongside Yen as Risk Aversion Builds Anew

Talking Points:

• Yen looks past Asian shares advance, drops alongside S&P 500 futures
• FX markets likely to look past UK and Eurozone PMIs, US ISM surveys
• US Dollar may find building support as risk aversion gains momentum

The anti-risk Japanese Yen advanced despite continued recovery on Asian stock exchanges, tracking S&P 500 futures downward. This suggested overnight strength in the equities space may have amounted to little more than catch-up momentum after a third consecutive day of gains on Wall Street. Meanwhile, FX markets appeared to look ahead alongside US index futures, where the bias appeared to swing back toward the risk-off side of the spectrum.

UK and Eurozone Manufacturing PMI data headlines the economic calendar in European trading hours and the analogous US ISM Manufacturing survey enters the spotlight later in the day. None of these outcomes are likely to generate a meaningful response from investors however because they are unlikely to reflect the impact of post-Brexit vote uncertainty on sector activity trends.

With that in mind, broad-based risk appetite trends are likely retain control over price action. US index futures continue to point lower and the Yen is building upward momentum as Europe comes online. Meanwhile, the benchmark 10-year US Treasury bond yield has fallen to a record low. This seems to point toward continued risk aversion into the end of the trading week. Besides the Japanese unit, such a scenario is likely to prove supportive for the US Dollar.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
23:30	AUD	AiG Perf of Mfg Index (JUN)	51.8	-	51
23:30	JPY	Jobless Rate (MAY)	3.2%	3.2%	3.2%
23:30	JPY	Job-To-Applicant Ratio (MAY)	1.36	1.35	1.34
23:30	JPY	Overall Household Spending (YoY) (MAY)	-1.1%	-1.1%	-0.4%
23:30	JPY	Natl CPI (YoY) (MAY)	-0.4%	-0.5%	-0.3%
23:30	JPY	Natl CPI Ex Fresh Food (YoY) (MAY)	-0.4%	-0.4%	-0.3%
23:30	JPY	Natl CPI Ex Food, Energy (YoY) (MAY)	0.6%	0.6%	0.7%
23:30	JPY	Tokyo CPI (YoY) (JUN)	-0.5%	-0.4%	-0.5%
23:30	JPY	Tokyo CPI Ex-Fresh Food (YoY) (JUN)	-0.5%	-0.5%	-0.5%
23:30	JPY	Tokyo CPI Ex Food, Energy (YoY) (JUN)	0.4%	0.4%	0.5%
23:50	JPY	Tankan Large Mfg Index (2Q)	6	4	6
23:50	JPY	Tankan Large Mfg Outlook (2Q)	6	3	3
23:50	JPY	Tankan Large Non-Mfg Index (2Q)	19	19	22
23:50	JPY	Tankan Large Non-Mfg Outlook (2Q)	17	17	17
23:50	JPY	Tankan Large All Industry Capex (2Q)	6.2%	5.3%	-0.9%
23:50	JPY	Tankan Small Mfg Index (2Q)	-5	-6	-4
23:50	JPY	Tankan Small Mfg Outlook (2Q)	-7	-8	-6
23:50	JPY	Tankan Small Non-Mfg Index (2Q)	0	1	4
23:50	JPY	Tankan Small Non-Mfg Outlook (2Q)	-4	-2	-3
00:00	AUD	CoreLogic House Px MoM (JUN)	0.5%	-	1.6%
01:00	CNY	Manufacturing PMI (JUN)	50	50	50.1
01:00	CNY	Non-manufacturing PMI (JUN)	53.7	-	53.1
01:45	CNY	Caixin China PMI Mfg (JUN)	48.6	49.2	49.2
02:00	JPY	Nikkei Japan PMI Mfg (JUN F)	48.1	-	47.8
05:00	JPY	Vehicle Sales (YoY) (JUN)	3.0%	-	6.6%
05:00	JPY	Natl CPI Ex Fresh Food, Energy (YoY) (MAY)	0.8%	0.8%	0.9%
05:00	JPY	Consumer Confidence Index (JUN)	41.8	41.1	40.9
06:30	AUD	Commodity Index AUD (JUN)	89.7	-	90.3
06:30	AUD	Commodity Index (YoY) (JUN)	9.9%	-	-10.0%

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
07:15	CHF	Retail Sales Real (YoY) (MAY)	-1.6% (A)	-2.2%	Low
07:15	EUR	ECB’s Coeure Speaks in Paris	-	-	Low
07:30	CHF	PMI Mfg (JUN)	55.3	55.8	Low
07:45	EUR	Markit/ADACI Italy Mfg PMI (JUN)	52.4	52.4	Low
07:50	EUR	Markit France Mfg PMI (JUN F)	47.9	47.9	Low
07:55	EUR	Markit/BME Germany Mfg PMI (JUN F)	54.4	54.4	Medium
08:00	EUR	Markit Eurozone Mfg PMI (JUN F)	52.6	52.6	Medium
08:30	GBP	Markit UK PMI Mfg SA (JUN)	50.1	50.1	Medium
09:00	EUR	Unemployment Rate (MAY)	10.1%	10.2%	Medium

Critical Levels

CCY	Supp 3	Supp 2	Supp 1	Pivot Point	Res 1	Res 2	Res 3
EURUSD	1.0833	1.0964	1.1035	1.1095	1.1166	1.1226	1.1357
GBPUSD	1.2758	1.3048	1.3179	1.3338	1.3469	1.3628	1.3918