Yen Soars as Crisis Builds, Chinese Housing Data on Tap

Another day, another slump in risk trades as US economic data and relentless worries about the European periphery weighed. The yen shot higher and the market will certainly be on guard against intervention in Asia. The top risk event in the upcoming session is April Chinese property prices. Thursdays Premium Intermarket Insights include new ideas on EURUSD, AUDUSD and a turn in CAD pairs. See more details below.

USD/JPY fell more than a full cent as cascading stops below 80.00 and in the yen crosses led to a relentless run. The trigger was the Philly Fed which dropped to -5.8 compared to +10.0 expected. Earlier, initial jobless claims were 370K compared to the 365K consensus. A think-tank report suggesting the next BOJ move will be an Operation Twist rather than more QE also boosted the yen.

Widespread rumors about a Spanish bank downgrade weighed on the euro late in Europe, sending the pair to 1.2665 but it rebounded to 1.2735 on renewed US QE3 expectations. After the US close, the downgrade came with giant Santander among the 16 victims.

Greece remains a moving target but there were some good signs as New Democracy took the lead in one poll. Syrizas Tsipras hinted at his strategy in a CNN interview, saying that the rest of Europe cant afford to let Greece fail. He appears to believe the core rather let Greece stay in the eurozone with better bailout terms than rise contagion.

Spain remains in crisis as Reuters sources revealed that it can only afford to fund itself for several months at yields above 6%.

US stocks fell to a 4-month low with the S&P 500 down 1.5% to 1304 but the more-important development was in bonds with 10-year Treasuries at 1.69% -- just two basis points from a record low. If that level gives way, USD/JPY could plunge anew.

Risks remain high in Asia-Pacific trading with China revealing April property price data for 70 cities at 0130 GMT. Prices fell in 37 of 70 cities in March but Beijing and Shanghai were flat. If the number of cities rise substantially and major cities begin to slump, look for risk trades to erode further.

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-AB