Risk-off on Uncertainty of Stimulus of CBs, Equities Drop, Yen Strengthens - 13.6.2013
Uncertainty has been characterizing recent trading as investors were abandoning equities on risk aversion due to increased speculation that central banks would not continue expanding stimulus programs. As a result of that US equities closed lower on Wednesday with S&P 500 losing by 0.84% and Dow Jones falling by 126 points an eventually below 15000 level. Latest comments of ECB president Draghi that Eurozone would recover in the 2nd half of 2013 and BOJ decision to hold monetary policy unchanged spurs expectations that CBs stimulus programs may reduce with FED's QE in main focus. Coming news today, US Retail Sales and Jobless Claims, should they report surprisingly better results would most likely increase speculation of FED withdrawal from current level of QE and weigh on risk sentiment.
NIKKEI 225 plunged heavily on early Thursday session, falling by 6.35% to end at 12,445 level as doubts increased about BOJ commitment to easy monetary policy for growth creation and eliminating deflation. At the same time, Yen strengthened greatly against its peers with the USDJPY breaching support at 95.08 and plummeting to new support at 93.81. The EURJPY dropped from resistance at 128.12 to almost two month low at 125.50, tomorrow’s BOJ Monetary Policy Meeting Minutes of the pprevious decision could provide some more insights to traders.
The Australian Dollar retraced to 0.9429 earlier today per USD and then upside bias resumed due to better than expected Jobs data. Employment increased by 1.1K while its was expected to decrease by 9.8K in May and Unemployment Rate surprisingly reduced to 5.5% in May from 5.6% the previous month. The Aussie today was not so positively influenced by jobs data and one explanation could be that RBA would not continue a more aggressive policy as economy strengthens and that is further reducing risk appettite, weighing on the curreny pair.