Yen Gains on BOJ Policy Hold, Dollar May Rise on Greek Vote Jitters

Talking Points

• Risk Appetite Finds Support on Hopes for Coordinated Central Bank Stimulus
• Soft US Economic Data May Spark Risky Asset Liquidation into the Week-End
• Yen Outperforms as BOJ Keeps Policy on Hold, Upgrades Growth Outlook

The Japanese Yen outperformed in overnight trade, rising against all of its leading counterparts after the Bank of Japan opted to keep monetary policy unchanged from its current setting. The bank held the benchmark interest rate at 0.1 percent and kept the size of its asset-purchase fund, the credit-loan program, and monthly JGB purchases at ¥40, ¥30 and ¥1.8 trillion respectively. Policymakers also upgraded their outlook for economic growth, attributing signs of pick-up to rebuilding efforts following last year's Tohoku earthquake and tsunami. The news boosted the Yen amid receding worries that the BOJ would further dilute the currency in an attempt to reach its 1 percent inflation target.

Risk appetite appears well-supported in late Asian trade following reports thatcentral banks are preparing to step in to stabilize financial marketsif the weekend's much-feared Greek election outcome generates widespread dislocation. Reuters cited a G20 cited official saying the world's top monetary authorities would provide liquidity if credit conditions seize up while Bank of England Governor Mervyn King unveiled a credit-easing program meant to feed funding to UK banks set to launch next week.

S&P 500 stock index futures are pointing higher ahead of the opening bell on Wall Street, but the risk of liquidation remains high as traders turn defensive into the close of the trading week. The US economic data docket may prove to be the catalyst for a turn-around in sentiment. The University of Michigan gauge of consumer confidence is expected to tick lower and New York State manufacturing activity slows in June. Industrial Production is likewise forecast to decelerate. Such an outcome promises to reboot demand for haven assets, pushing the US Dollar higher.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	NZD	Business NZ PMI (MAY)	55.7	-	48.2 (R+)
1:00	NZD	ANZ Consumer Confidence Index (JUN)	105.8	-	113.9
1:00	NZD	ANZ Consumer Confidence (MoM) (JUN)	-7.1%	-	-0.1%
2:52	JPY	Bank of Japan Rate Decision (JUN 15)	0.10%	-	0.10%
3:00	NZD	Non Resident Bond Holdings (MAY)	61.7%	-	62.1%

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:00	EUR	EU 25 New Car Registrations (MAY)	-	-6.9%	Low
8:00	EUR	Italian Trade Balance - Total (¬) (APR)	-	2065M	Low
8:00	EUR	Italian Trade Balance Eu (¬) (APR)	-	1555M	Low
8:30	GBP	Total Trade Balance (£) (APR)	-2700	-2739	Low
8:30	GBP	Trade Balance Non EU (£) (APR)	-4175	-4109	Low
8:30	GBP	Visible Trade Balance (£) (APR)	-8500	-8564	Medium
9:00	EUR	Euro-Zone Employment (QoQ) (1Q)	-	-0.2%	Low
9:00	EUR	Euro-Zone Employment (YoY) (1Q)	-	-0.2%	Low
9:00	EUR	Euro-Zone Trade Balance (¬) (APR)	4.0B	8.6B	Low
9:00	EUR	Euro-Zone Trade Balance s.a. (¬) (APR)	4.2B	4.3B	Low

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2571	1.2699
GBPUSD	1.5442	1.5593

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

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