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Yen Drops, Aussie and NZ Dollars Rise on GPIF Asset Allocation Change

Yen Drops, Aussie and NZ Dollars Rise on GPIF Asset Allocation Change

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Yen Drops, Aussie and NZ Dollars Rise on GPIF Asset Allocation Change
  • S&P 500 and FTSE 100 Futures Suggest Risk-On Mood Likely to Continue
  • See Economic Releases Directly on Your Charts with the DailyFX News App

A swell in risk appetite at the start of the trading week put pressure on the safety-linked Japanese Yen while pushing the sentiment-geared Australian and New Zealand Dollars higher. The MSCI Asia Pacific regional benchmark stock index rose 2 percent, with Japanese shares leading the way after a Nikkei News report cited unnamed sources revealing the new asset allocation for Government Pension Investment Fund (GPIF).

Asia’s largest pension fund will increase its holdings of Japanese stocks to 25 percent from 12 percent of the overall portfolio and cut the share allocated to JGBs to 40 percent from 60 percent. Foreign stocks and bonds were said to be allotted 30 percent of total holdings under the new setup, up from 23 percent. The fund will have leeway of up to 6 percent deviation from target distribution levels, meaning it could conceivably hold over 30 percent of its assets in Japanese equities.

Looking ahead, a quiet economic calendar in European and US trading hours is likely to see sentiment trends remain at the forefront as the driver of price action. S&P 500andFTSE 100futures are pointing firmly higher in late Asian trade, hinting the “risk-on” mood is likely is likely to continue. September’s German PPI figures are due to show factory-gate prices fell at a year-on-year rate of 1 percent, marking the worst reading in eight months. The outcome may not yield a strong reaction from the Euro however considering its limited implications for near-term ECB stimulus expansion.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:30

NZD

Performance of Services Index (SEP)

58.0

-

57.7

23:01

GBP

Rightmove House Prices (MoM) (OCT)

2.6%

-

0.9%

23:01

GBP

Rightmove House Prices (YoY) (OCT)

7.6%

-

7.9%

0:00

NZD

ANZ Consumer Confidence Index (OCT)

123.4

-

127.7

0:00

NZD

ANZ Consumer Confidence (MoM) (OCT)

-3.4%

-

1.8%

5:00

JPY

Leading Index (AUG F)

-

104

5:00

JPY

Coincident Index (AUG F)

-

108.5

5:30

JPY

Tokyo Dept Store Sales (YoY) (SEP)

-

1.3%

5:30

JPY

Nationwide Dept Store Sales (YoY) (SEP)

-

-0.3%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German Producer Prices (YoY) (SEP)

-1.0%

-0.8%

Medium

6:00

EUR

German Producer Prices (MoM) (SEP)

0.0%

-0.1%

Medium

7:00

JPY

Convenience Store Sales (YoY) (SEP)

-

-2.4%

Low

8:00

EUR

Eurozone Current Account sa (€) (AUG)

-

18.7B

Low

8:00

EUR

Eurozone Current Account nsa (€) (AUG)

-

32.3B

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.2595

1.2688

1.2724

1.2781

1.2817

1.2874

1.2967

GBPUSD

1.5891

1.5987

1.604

1.6083

1.6136

1.6179

1.6275

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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