ASIA session review 18.06.2013:

Data released (actual, consensus, previous):                   

08:30    UK    GBP    Core Consumer Price Index (YoY) (May)       2.2%    2.1%    2.0%        

08:30    UK    GBP    Consumer Price Index (MoM) (May)   0.2%    0.1%    0.2%        

08:30    UK    GBP    Consumer Price Index (YoY) (May)   3.1%    2.6%    2.4%        

08:30    UK    GBP    DCLG House Price Index (YoY) (Apr)     2.6%    2.6%    2.7%        

08:30    UK    GBP    PPI Core Output (YoY) n.s.a (May)  0.8%    0.9%    0.7%

09:00    EMU    EUR    ZEW Survey - Economic Sentiment (Jun)    30.6        27.6        

09:00    DE    EUR    ZEW Survey - Economic Sentiment (Jun)   38.5    38.1    36.4        

09:00    DE    EUR    ZEW Survey - Current Situation (Jun)  8.6    9.5    8.9

The yen dropped against all except one of its 16 major counterparts after a Bank of Japan report showed the current-account balance will increase to a record amid unprecedented monetary stimulus.

Fed Chairman Ben S. Bernanke said last month the central bank could reduce its monthly purchases of $45 billion of Treasuries and $40 billion of mortgage-backed securities if the employment outlook shows sustained improvement.

Bernanke is “likely to remain vague” at a press conference this week about the Fed’s future exit strategy or a tapering of asset purchases, Joseph Capurso, a currency strategist at Commonwealth Bank of Australia (CBA) in Sydney, wrote today in a note to clients.

“Market participants are uncertain about the outlook for extraordinary policy support being provided by the Federal Reserve and the Bank of Japan,” he wrote. “Hedgers such as real money managers and corporates may consider taking cover against the risk of heightened volatility.”

The Federal Open Market Committee, the Fed’s interest-rating setting body, is due to begin its meeting Tuesday and release its policy decision Wednesday.

The Wall Street Journal last week reported that the Fed, led by Chairman Ben Bernanke, will use this week’s meeting to try to calm fears that it’s moving closer to raising short-term interest rates and that its bond-buying program will end all at once.

EURO:

The euro on Tuesday slipped after Draghi said ECB has 'open mind' on non-standard monetary policy but gained later after strong  ZEW  data.

The summit of the Group of Eight major economies being held on Monday and Tuesday in Northern Ireland.

EUR/USD has failed to break above $1.3400 (initial resistance, Jan 14 highs) after strong ZEW data. Further  resistance comes at $1.3480, then - near $1.3540 (channel resistance line from May 29).

Support is around $1.3330 ( channel support line from May 29) Below support is around $1.3280 (Jun 13 lows), $1.3200 and $1.3170 (Jun 10 lows).

POUND:

The pound is under pressure after UK inflation data and ahead of Inflation Report Hearings.

GBP/USD tests currently channel support line from May 29 at $1.5660. Break under $1.5660 widens losses to $1.5600 (psychological level). Resistance comes at last week’s highs on $1.5740 (also 4-months highs), next resistances could be found at $1.5765 (Feb 7 high) and $1.5800 (psychological level).

YEN:

The yen dropped versus all most-traded counterparts as stocks around the world gained, damping demand for haven assets.

The dollar advanced versus the Japanese currency before the Federal Reserve starts a two-day policy meeting tomorrow.

The yen has fallen 7.4% this year. “We are looking for the dollar to resume its uptrend versus the yen,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “The market can take advantage of any suggestions by the Fed that they are close to reducing bond purchases. The yen should remain under pressure across the board.”

USD/JPY currently probes Y95.30. Minor support placed at Friday’s lows on Y94.00, extending to Y93.80 (Jun 13 lows). Below support comes at Y93.50 (Mar 25 lows) and then - at Y92.50 (Apr 2 lows). Resistance is around Y96.20 (Jun 12 hourly highs) and Y97.00 (Jun 12 highs).

COMMODITY CURRENCIES:

Australia’s dollar fell for a third day after the Reserve Bank indicated the currency may weaken further.

DATA AHEAD:

Inflation Report Hearings in the UK will start at 09:00  GMT.

US Building Permits, as well as Housing Starts and CPI data are due at 12:30 GMT.    

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