Dollar, Yen Aim Higher as All Eyes Turn to Eurozone FinMin Summit

The safe-haven US Dollar and Japanese Yen rose overnight amid risk aversion before a Eurozone finance ministers' summit. More of the same appears likely ahead.

Talking Points

• US Dollar, Japanese Yen Rise as Risk Aversion Grips Asian Stock Markets
• Canadian Dollar Well-Supported in the Wake of US Employment Report
• Eurozone FinMin Summit in Focus for Greece Funding, Spain Bailout Cues
• IMF Likely to Downgrade Global Economic Outlook in Updated Data Set
• Germany's Trade Surplus Set to Narrow, Industrial Production to Decline

The US Dollar and Japanese Yen advanced against most of their major counterparts as Asian stocks declined, boosting demand for the go-to haven currencies. Regional bourses (excluding Japan, where markets are closed for a holiday) slumped 0.9 percent on average. The Canadian Dollar was likewise well-supported in the wake of Friday's better-than-expected US jobs report as traders wagered that a firming recovery in the world's top economy will boost cross-border demand for its northern neighbor.

From here, all eyes turn to the Luxembourg, where Eurozone finance ministers are due to begin a two-day meeting to discuss debt management efforts. Traders will be interested in any moves to mend disagreements between the Greek government and troika monitors that open the door for disbursement of the latest batch of bailout funding. Any clues about the timing of a Spanish request for a full-on rescue package are also sought, particularly after borrowing costs rose at a bond auction last week.

Against this backdrop, the IMF is due to release an updated set of global economic performance expectations, with downgrades widely expected. This suggests that absent concrete positive cues from Luxembourg, the risk-off mood is likely to carry forward. On the data front, Germany's Trade Balance surplus is expected to narrow to ¬15.2 billion - the lowest in four months - while Industrial Production is forecast to have fallen 0.6% percent in August.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:01	GBP	Lloyds Employment Confidence (SEP)	-49	-	-43
0:30	AUD	ANZ Job Advertisements (MoM) (SEP)	-2.8%	-	-2.4% (R-)
1:00	NZD	REINZ Housing Price Index (MoM) (SEP)	0.6%	-	1.3%
1:00	NZD	REINZ House Sales (YoY) (SEP)	8.0%	-	16.2%
1:00	NZD	REINZ Housing Price Index (SEP)	3442.1	-	3420.1
2:30	CNY	HSBC Services PMI (SEP)	54.3	-	52.0
5:30	AUD	Foreign Reserves (A$) (SEP)	44.9B	-	44.1B

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
5:45	CHF	Unemployment Rate s.a. (SEP)	3.0%	2.9%	Low
5:45	CHF	Unemployment Rate (SEP)	2.8%	2.8%	Medium
6:00	EUR	German Current Account (¬) (AUG)	12.7B	12.8B	Low
6:00	EUR	German Exports s.a. (MoM) (AUG)	-0.6%	0.4%	Low
6:00	EUR	German Imports s.a. (MoM) (AUG)	0.2%	0.7%	Low
6:00	EUR	German Trade Balance (¬) (AUG)	15.2B	16.9B	Medium
6:30	EUR	French Bank of France Business Sentiment (SEP)	91	93	Low
7:15	CHF	Consumer Price Index (MoM) (SEP)	0.3%	0.0%	Medium
7:15	CHF	Consumer Price Index (YoY) (SEP)	-0.4%	-0.5%	Medium
7:15	CHF	CPI - EU Harmonised (MoM) (SEP)	-	-0.3%	Low
7:15	CHF	CPI - EU Harmonised (YoY) (SEP)	-	-0.5%	Low
8:30	EUR	Euro-Zone Sentix Investor Confidence (OCT)	-20.9	-23.2	Low
10:00	EUR	German Industrial Production (YoY) (AUG)	-1.6%	-1.4%	Medium
10:00	EUR	German Industrial Production (MoM) (AUG)	-0.6%	1.3%	Medium

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2881	1.3080
GBPUSD	1.6065	1.6194

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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