Asian markets pull back on Bullard comments

Friday, June 27, 2014

Asian stocks traded weaker overnight as they followed Wall Street’s lead as mounting concerns regarding the outlook for US interest rates prompted a bout of profit taking. Japanese stocks experienced the heaviest selling activity with both the Nikkei and TOPIX under pressure throughout the entire session. The sell-off was prompted by comments made by St Louis Fed president, James Bullard, who hinted at an interest rate rise in the US as early as March next year. With the FOMC close to its goals for full employment and low inflation Bullard commented that the economy “could tolerate at least a little bit of the central bank getting back to a more normal stance”.

The warning from Bullard saw the dollar weaken against the yen for a third consecutive session and gain some substantial ground against the dollar after being dominated by rangebound trading throughout June. Overnight, JPY managed to breach the 200 day MA as it traded below 101.40 for the first time since 22nd May and fears of higher rates in the US boosted demand for the yen as a safe haven currency.

A busy day for data in Europe today will ensure investors remain engaged. Markets have made a steady start this morning as data from France started the session on a firm footing. The final reading of Q1 GDP coming in as expected at 0% q/q and PPI data for May which indicated a -0.5% deceleration m/m in May. German CPI data is expected shortly and eurozone industrial and economic confidence indicators will offer further insight into market conditions later on this morning, which will keep investors busy throughout the session. The final reading for first quarter Q1 GDP for the UK is also expected later on this morning and over in the US only the University of Michigan confidence index which is due later this afternoon will provide any further market colour to investors.

Yen strengthens against the dollar after Bullard comments

JPY Curncy Japanese Yen Spot 2014 06 27 08 11 12


Events for today

0030

JP

May

CPI

1000

EZ

Jun

Bus Climate & Con Sentiment

1455

US

Jun

Michigan Survey Final

LT: 

Jul  Heating Oil & RBOB (NYMEX)

FN: 

Jul  Soy Complex, Wheat & Corn (CBOT)

Jul  Copper, Gold & Silver (COMEX) 

Topics: GDP, JPY
More from: Kash Kamal