Talking Points:
- New Zealand Dollar Falls as RBNZ Rate Hike Bets Unravel
- Aussie Dollar Shrugs Off Soft Data, Gains on Risk Appetite
- US Dollar May Rise Despite Downgrade of 1Q GDP Figure
The US Dollar corrected broadly lower in overnight trade after hitting a two-month high in the preceding 24 hours. The New Zealand Dollar likewise came under pressure in a move that once again tracked a decline in the island nation’s benchmark 10-year bond yield, hinting recent weakness reflects eroding RBNZ interest rate hike expectations. We have entered short NZDUSD.
The Australian Dollar outperformed, shrugging off disappointing first-quarter Private Capital Expenditure data, to rise as much as 0.5 percent on average against its leading counterparts. The move tracked an overnight rally in S&P 500 futures, pointing to a swell in risk appetite as the catalyst behind gains in the sentiment-linked currency. We remain short AUDUSD.
A bare European data docket puts the spotlight turns to the second revision of first-quarter US GDP figure. Expectations point to a downgrade showing output fell 0.5 percent. Initial estimates had the economy growing 0.1 percent.
Speculation about a revised print in negative territory has been swirling around for weeks. This may take the sting out of a soft print, with traders reacting to the outcome in relative rather than absolute terms. That means a better-than-expected outcome may drive the greenback higher even if it telegraphs a significantly weaker first quarter than previously thought.
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Asia Session
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
23:50 |
Retail Trade (YoY) (APR) |
-4.4% |
-3.3% |
11.0% |
|
23:50 |
JPY |
Retail Trade s.a. (MoM) (APR) |
-13.7% |
-11.7% |
6.4% |
23:50 |
JPY |
Large Retailers' Sales (APR) |
-6.8% |
-7.1% |
16.1% |
1:00 |
AUD |
HIA New Home Sales (MoM) (APR) |
2.9% |
- |
0.2% |
1:30 |
AUD |
Private Capital Expenditure (1Q) |
-4.2% |
-1.9% |
-4.5% |
European Session
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
8:30 |
Lloyds Business Barometer (MAY) |
- |
66 |
Low |
Critical Levels
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
1.3508 |
1.3557 |
1.3574 |
1.3606 |
1.3623 |
1.3655 |
1.3704 |
|
1.6506 |
1.6624 |
1.6667 |
1.6742 |
1.6785 |
1.6860 |
1.6978 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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