Japan Facing Debt Default Risk

Market Brief

The risk sentiment was mixed on the Asian trading session, amid Japanese Economy Minister Amari said that the nation faces risks from the excessive Yen decline, and Fujimaki warned of a debt default within five years to weaken the Yen up to 400-500 Yen vs. USD. Fujimaki stated ?Large-scale spending is ridiculous given the amount of debt Japan has accumulated? and added that ?Abe?s policies would have worked some 10 years ago, but now they will only accelerate an economic collapse?. Japan also released y/y M2 and M3 stocks, higher than the expectations (M2 y/y actual 2.6%, vs. 2.1% exp. & prior, M3 y/y actual 2.2%, vs. 1.9% exp. & prior). In reaction, USDJPY collapsed to 88.63 (nearly 90 pips), before then consolidating gains from last Friday (Jan 11th), while EURJPY and GBPJPY slipped down to 118.39 and 142.480 respectively. The Nikkei 225 advanced 0.72% and Shanghai?s composite added 0.56% (failing to seriously extend yesterday?s upwards surge), Hang Seng index lost 0.56%, while Kospi and Taiex fell by 1.16% and 0.75%. In US, the stock futures slumped amid Treasury Secretary Geithner comments that the Government borrowing limits may be breached as early as next month unless Congress raises the debt ceiling. The S&P futures lost 0.19%, while Dow Jones and Nasdaq futures slipped down by 0.13 and 0.17% respectively. In the Euro-Zone, the German CPI came in line with the expectations, while the y/y GDP decreased to 0.8%, the lowest since 2005. EURUSD wrote of yesterday?s gains, while EURCHF hit 1.23850-high overnight. Gold advanced to 1,676.71, while silver crossed over 31.20 for the first time since Jan. 2th. Today?s focus is on the UK m/m and y/y PPI Output, UK m/m and y/y CPI, UK m/m and y/y RPI, Euro-Zone November Trade Balance, US January Empire Manufacturing, US December Advance Retail Sales, US m/m and y/y Producer Price Index, and PPI ex-Food and Energy.

10,879.08	0.7176
23,345.55	-0.2892
2,324.81	0.5653
6,055.00	-0.2881
7,739.00	0.2916
1,461.50	-0.1912
13,416.00	-0.1266

1,672.85	0.2998
31.13	0.2496
93.74	-0.4249
13.52	1.1976
79.54	0.0704

0.0%	-0.2%	GBP / 09:30
2.4%	2.2%	GBP / 09:30
0.5%	0.2%	GBP / 09:30
2.7%	2.7%	GBP / 09:30
0.4%	0.0%	GBP / 10:30
3.0%	3.0%	GBP / 09:30
EUR 8.0B	EUR 7.9B	EUR / 10:00
0.00	-8.10	USD / 13:30
0.2%	0.3%	USD / 13:30
-0.1%	-0.8%	USD / 13:30
1.4%	1.5%	USD / 13:30
0.2%	0.1%	USD / 13:30
2.1%	2.2%	USD / 13:30

Currency Tech

EURUSD
R 2: 1.3492
R 1: 1.3389
CURRENT: 1.3354
S 1: 1.3310
S 2: 1.3241

GBPUSD
R 2: 1.6340
R 1: 1.6206
CURRENT: 1.6075
S 1: 1.6063
S 2: 1.5958

USDJPY
R 2: 89.65
R 1: 89.10
CURRENT: 88.84
S 1: 88.63
S 2: 88.34

AUDUSD
R 2: 1.0625
R 1: 1.0590
CURRENT: 1.0560
S 1: 1.0460
S 2: 1.0410

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

Source: http://www.fxstreet.com/fundamental/market-view/market-session-snapshot/2013-01-15.html

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