Rising Yen Impact Stocks, Grim OECD Outlook

Asian stocks moved down in overnight trading, undoing a small streak of gains. This comes after the JPY, which traded at close to three week highs ( gains of 0.38 percent against the USD), was impacted by the regional benchmark index, which moved down for the first time seven months.

The Nikkei 225 in Japan was plummeting last night as the more expensive JPY caused an increase in export prices. The Nikkei saw declines of 4 percent.

The positive reactions to the US data yesterday was undone by testimony from the OECD. The OECD -which is comprised from 34 developed economies – said that in their biannual Economic Outlook there is prolonged weakness in the economies of both the Eurozone and Europe which could impact the global economy. The Secretary General of the OECD Angel Gurria commented that the situation is “particularly fragile” in the region and asked the ECB to contemplate doing more in order to stimulate economic growth.

Stocks
Global declines were seen in the stock markets with Asian stocks tumbling led by concerns of a rising JPY.

The European Indexes saw declines too with the FTSE 100 shedding 2 percent, the German DAX losing 1.7 percent, the Australian S&P dropping 1.26 percent led by the mining and finance sector which were trading down. In Hong Kong the Hang Seng was down 0.90 percent and in China the Shanghai Composite was down 0.61 percent following the IMF reducing its expansion outlook in China to 7.75 percent from 8 percent. Meanwhile the OECD’s outlook shrunk to 7.8 percent from 8.5 percent.

Forex
The dollar was trading mostly lower against its counterparts in overnight session. It was down 0.29 percent against the euro, 0.33 percent against the GBP and the AUD was up 0.57 per cnt against the dollar as investors locked in profits. The only real exception was the JPY which gained against the USD – 0.45 percent, sparking concerns about the strengthening YEN.

Commodity Markets
The weakening USD and risk-off sentiment saw investors moving to nicely priced commodities, Gold and silver were both trading higher, with Gold up 0.82 percent and Silver up 0.43 percent. Meanwhile Crude oil was unmoved as the declining dollar was offset by the lower demands for the commodity.

What To Watch
Lots of important data released today starting room Europe with GDP data from Switzerland and Spain, then PPI from Italy and PMI from the Eurozone. We are expecting declines which would impact the EUR. Then in the afternoon GDP coming out of the US as well as Jobless claims will give a clearer picture of the economic health of the U.S.