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Idea of the Day

There’s certainly a risk aversion feel about today with risk assets coming under pressure. This has given the dollar a boost for once, a move that is very much against the current short term trend as it has suffered quite a bit during the political wrangling. The Yen is also attracting buyers as it is making ground against most other currencies this morning with investors seeking a safe haven. Against the dollar the Yen is testing a multi week high around 97.00 and against the euro traders will be watching the 131.40-60 level of support closely. Certainly in the case of the USD/JPY things are very interesting as a lack of resolution to the debt ceiling problem will justify Bernanke’s refusal to taper at the last FOMC meeting and push any chance of tapering well into 2014.

07.10.13_0

 

Data/Event Risks

USD:  In the absence of any major data releases today all eyes remain on the US as the debt ceiling approaches after another week end of sabre rattling between the Democrats and Republicans over spending. The Republicans have also hardened their stance making a default rather more realistic if they refuse to find common ground with the President.

NZD:  Later on tonight we see the release of the New Zealand Institute of Economic Research (NZIER) Business Confidence being released, which is a leading indicator of economic health for the New Zealand economy. The last figure was 32, the highest level since January 2012 and any figure above this could give the Kiwi a boost.

Latest FX News

JPY:  Even though there is very little in the way of market moving data scheduled for release today, we have seen the release of the leading index from Japan this morning. This came in slightly lower than expected at 106.5, also down from the previous month of 107.7, giving a sign that economic growth maybe moderating. However, the worse than expected figure has not led to any weakness in the Yen which is attracting investors with all this uncertainty surrounding the US debt ceiling.

Further reading:

EUR/USD Maintains Broader Medium Term Upside Bias – Technical analysis

Delay in the release of jobs data due to government shut-down has markets stymied