By FXEmpire.com
Analysis and Recommendations:
The EUR/JPY is trading at 98.75 down 0.65 as the euro weakened on eco data from Germany showing a rise in unemployment and an increase in claims.
The PBOC was active overnight, issuing CNY 30bn in reverse repos at a yield of 4.15% in order to address a cash shortage at quarter end that had caused short-term yields to rise markedly. It’s not clear if this is being done in lieu of a reduction in reserve ratio requirements, or is a preliminary measure as the PBOC waits until quarter end passes to measure the liquidity conditions of banks prior to making larger policy moves. The additional liquidity is a plus for the JPY.
As problems stemmed from the EU Summit, risk aversion continued to mount, helping to support the JPY.
Investors see a risk that larger short-term measures are introduced at this Summit in order to address the very steep yields on Spanish and Italian debt instead of divisive action. Even if there are not any tangible measures introduced, the summit definitely provides ample space for rumors to circulate in markets. In sum, markets will be on edge today and tomorrow.
Although much of Europe seems to be in crisis, it’s worth noting that while the German economy may be performing sluggishly the German labor market is still quite strong. 7k more people were added to the ranks of the unemployed in June, causing Germany’s unemployment rate to edge up to 6.8% from 6.7% in May
Spain and Italy released CPI data for June. Spain’s CPI is tracking at 1.9% y/y (1.8% on a ‘EU harmonized’ basis) and fell moderately on the month, while Italy’s CPI surprised to upside, rising by 0.2% m/m. Food prices increased more than expected in Italy (+0.9% m/m) while lower energy costs only filtered into the transportation costs category in a limited fashion (transportation declined by -0.2% m/m).
In this context, European economic confidence data released today showed a general deterioration in the way in which European businesses view the overall business climate. Industrial business confidence fell from -11.4 in May to -12.7 in June, consumer confidence fell to -19.8 on the index, and the services sector measure fell from -5.2 to -7.4. The overall confidence index fell from 90.5 in May to 89.9 in June.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks
Economic Data for June 28, 2012 actual v. forecast… and you didn’t think it could get worse. The German workhorse breaks a leg…
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jun. 28 |
JPY |
Retail Sales (YoY) |
3.6% |
3.0% |
5.7% |
|
AUD |
HIA New Home Sales (MoM) |
0.7% |
6.9% |
||
|
GBP |
Nationwide HPI (MoM) |
-0.6% |
0.1% |
0.2% |
|
|
EUR |
German Unemployment Rate |
6.8% |
6.7% |
6.8% |
|
|
EUR |
German Unemployment Change |
7K |
5K |
0K |
|
|
GBP |
Business Investment (QoQ) |
1.9% |
3.6% |
3.6% |
|
|
GBP |
Current Account |
-11.2B |
-9.0B |
-7.2B |
|
|
GBP |
GDP (QoQ) |
-0.3% |
-0.3% |
-0.3% |
|
|
GBP |
GDP (YoY) |
-0.2% |
-0.1% |
-0.1% |
|
|
EUR |
Italian 10-Year BTP Auction |
6.19% |
6.03% |
And the good news is or almost good news
|
USD |
Initial Jobless Claims |
386K |
385K |
392K |
|
USD |
GDP Price Index (QoQ) |
2.0% |
1.7% |
1.7% |
|
USD |
GDP (QoQ) |
1.9% |
1.9% |
1.9% |
|
USD |
Continuing Jobless Claims |
3296K |
3280K |
3311K |
There are no additional reports due in Japan on Friday, only US data
|
Date |
Time |
Currency |
Event |
Previous |
|
Jun 29 |
12:30 |
USD |
0.1% |
|
|
12:30 |
USD |
0.3% |
||
|
13:45 |
USD |
52.7 |
||
|
13:55 |
USD |
74.1 |
Click here for updated EUR/JPY News.
Originally posted here
