Safe havens gain amid increased risk aversion

The buck was slightly higher in its recent range with the dollar index testing the top of its daily ichimoku cloud ahead the 80 level. Risk aversion saw flows in the USD as well as the JPY, although the Bank of Japan’s unanimous inaction last night gave further support to the yen which was the clear outperformer in the G10 space today. USD/JPY tumbled to test a key pivot around the convergence of the weekly Tenkan line, top of the weekly cloud, and 50-day SMA. Lower UST yields weighed on the USD/JPY as well and the correlation between the US 10-year yields and USD/JPY rose to its highest level in over a year (rolling correlation based on 30-period daily % change).

Treasury yields declined across the curve with the 10-year yields falling below the 2.00% to test near the 1.96% level which is the 61.8% Fibonacci level of the rally from Sept. lows to Oct. highs. European stock markets finished significantly lower and sovereign yields were markedly higher with Spain’s 10-year yields nearing 6.00% – levels above the ECB’s 3-year LTRO’s. Yield spreads widened out as yields on German bunds fell with the 2-year note yield falling to record lows below 10 basis points. The expanding spreads are notable as they reflect the ongoing debt concerns in the Euro zone. Despite the persistent worries, the euro has held up relatively well with the common currency mixed against the majors today. It is higher against the commodity currencies and weaker against the JPY and USD with EUR/USD consolidating above long term neckline support and below the 100-day SMA. We maintain our bias lower for the euro and a sustained break below the head and shoulders neckline would be a significant bearish development from a technical perspective.

In the U.S. , NFIB small business optimism unexpectedly fell to 92.5 in March from the prior 94.3 (cons. 95.0). Job openings rose by about 20K in Feb. to nearly 3.5M – further evidence of Bernanke’s observation that the job market remains far from normal. The data underscored the structural shift in the labor market and highlights the mismatch in skills for job vacancies. Feb. Wholesale inventories rose by more than expected with a print of +0.9% (prior +0.6%) – a sign that demand may not be as strong as initially anticipated.

Fed speakers during the NY Session included Dallas Fed President Fisher who said that both US employment growth and the Fed’s influence over labor is “insufficient”. He expressed his concern on inflation and reiterated that he sees “excess liquidity” in the US. Fisher also echoed recent commentst that Friday’s jobs number is just one data point and that “you don’t make a decision based on one data point”. Elsewhere, the Fed’s Kocherlakota spoke with a hawkish tone and said that conditions may warrant a rate increase later this year.

U.S. equities declined for the fifth consecutive session with the S&P 500 finishing the day lower by about -1.71% while the DJIA fell by around -1.65% to close. Commodities were mixed with gains in the precious metals on haven demand while oil continued to slide with WTI crude nearing the psychological $100/barrel level (currently down about -1.12%).

On the data front for the upcoming Asia/Pacific session are Japan Feb. machine orders and bank lending figures for March. Australia sees the April Westpac consumer confidence index, Feb. home loans, and investment lending while in New Zealand, Finance Minister English is set to speak.

Источник: Forex.com

10.04.2012