US Dollar at Risk on GDP Downgrade, NZ Dollar Down on RBNZ Bets

2015-05-29 07:06:00

Talking Points:

NZ Dollar Swoons Amid Building RBNZ Interest Rate Cut Speculation
Unexpected Swiss GDP Drop Fuels SNB Easing Bets, Punishes Franc
US Dollar May Weaken as GDP Downgrade Weighs on Fed Outlook

The New Zealand Dollar underperformed in overnight trade, falling as much as 0.8 percent on average against its top counterparts. The move tracked a slump in front-end bond yields, pointing to building RBNZ rate cut speculation as the catalyst behind the move.

A round of disappointing economic data may have inspired the shift in investors’ outlook. Building permits fell 1.7 percent in April while a measure of business confidence from ANZ bank dropped to the lowest level since September 2014. Markets now price in a 54 percent probability of an RBNZ rate cut at the next policy meeting. That amounts to the most certain that investors have been about on-coming easing in three years.

The Swiss Franc likewise traded lower after GDP figures unexpectedly showed the economy contracted 0.2 percent in the first quarter, marking the worst result since the three months through September 2011. The currency’s slump was mirrored by a drop in Switzerland’s benchmark 10-year bond yield, suggesting investors took the data to mean an expansion of the SNB’s stimulus efforts may be in the cards.

Looking ahead, a revised set of first-quarter US GDP figures is in focus. A downward revision showing output shrank at an annualized pace of 0.9 percent is expected. Initial estimates pointed to a 0.2 percent increase. A soft print may weigh on the US Dollar as investors turn their gaze back to Fed rate hike expectations, which have conspicuously stagnated this week even as the greenback soared.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Building Permits (MoM) (APR)	-1.7%	-	10.3%
23:05	GBP	GfK Consumer Confidence (MAY)	1	4	4
23:30	JPY	Jobless Rate (APR)	3.3%	3.4%	3.4%
23:30	JPY	Job-To-Applicant Ratio (APR)	1.17	1.15	1.15
23:30	JPY	Overall Household Spending (YoY) (APR)	-1.3%	3.0%	-10.6%
23:30	JPY	Natl CPI (YoY) (APR)	0.6%	0.6%	2.3%
23:30	JPY	Natl CPI Ex Fresh Food (YoY) (APR)	0.3%	0.2%	2.2%
23:30	JPY	Natl CPI Ex Food, Energy (YoY) (APR)	0.4%	0.3%	2.1%
23:30	JPY	Tokyo CPI (YoY) (MAY)	0.5%	0.5%	0.7%
23:30	JPY	Tokyo CPI Ex-Fresh Food (YoY) (MAY)	0.2%	0.2%	0.4%
23:30	JPY	Tokyo CPI Ex Food, Energy (YoY) (MAY)	0.1%	0.0%	0.0%
23:50	JPY	Industrial Production (MoM) (APR P)	1.0%	1.0%	-0.8%
23:50	JPY	Industrial Production (YoY) (APR P)	-0.1%	-0.1%	-1.7%
01:00	AUD	HIA New Home Sales (MoM) (APR)	0.6%	-	4.4%
01:00	NZD	ANZ Activity Outlook (MAY)	32.6	-	41.3
01:00	NZD	ANZ Business Confidence (MAY)	15.7	-	30.2
01:30	AUD	Private Sector Credit (MoM) (APR)	0.3%	0.5%	0.5%
01:30	AUD	Private Sector Credit (YoY) (APR)	6.1%	6.3%	6.2%
03:00	NZD	Money Supply M3 (YoY) (APR)	7.7%	-	8.3%
04:00	JPY	Vehicle Production (YoY) (APR)	-7.5%	-	-6.5%
05:00	JPY	Housing Starts (YoY) (APR)	0.4%	0.2%	0.7%
05:00	JPY	Annualized Housing Starts (APR)	0.913M	0.910M	0.92M
05:00	JPY	Construction Orders (YoY) (APR)	-12.1%	-	10.8%

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
05:45	CHF	GDP (QoQ) (1Q)	-0.2% (A)	0.5%	Medium
05:45	CHF	GDP (YoY) (1Q)	1.1% (A)	1.9%	Medium
06:00	EUR	German Retail Sales (MoM) (APR)	1.7% (A)	-1.4%	Low
06:00	EUR	German Retail Sales (YoY) (APR)	1.0% (A)	4.3%	Low
07:00	CHF	KOF Leading Indicator (MAY)	93.1 (A)	89.8	Low
08:00	EUR	Eurozone M3 Money Supply (YoY) (APR)	4.9%	4.6%	Medium
08:00	EUR	Eurozone M3 3-Month Average (APR)	4.5%	4.1%	Medium
08:00	EUR	Italian GDP w.d.a. (QoQ) (1Q F)	0.3%	0.3%	Medium
08:00	EUR	Italian GDP w.d.a. (YoY) (1Q F)	0.0%	0.0%	Medium
08:30	GBP	Lloyds Business Barometer (MAY)	-	53	Low