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New Zealand Dollar Gains as China Scraps One Child Policy

New Zealand Dollar Gains as China Scraps One Child Policy

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Kiwi Dollar Outperforms Against Aussie as China Scraps One-Child Policy
  • US Price Growth Data Boosts Fed Rate Hike Outlook, Boosting US Dollar
  • See Economic Releases Right on Your Charts with the DailyFX News App

The Australian and New Zealand Dollars outperformed in overnight trade. The two sentiment-linked currencies advanced alongside S&P 500 futures, hinting the move reflected firming risk appetite. The Kiwi pulled ahead of its Aussie counterpart asChina announced a decision to scrap its one-child policy. The move may fuel greater milk powder demand, amounting to a windfall for New Zealand dairy exporters.

Risk appetite was surprisingly durable despite a Bank of Japandecision to withhold additional stimulus. Options markets were heavily skewed in favor of Yen weakness ahead of today’s policy announcement, with the premium paid for the right to sell the currency compared with the right to buy rising to a five-year high. That suggested investors were betting on a dovish result. BOJ Governor Haruhiko Kuroda and company saw things otherwise, voting 8-1in favor of the status quo.

Looking ahead, stock index futures hint the risk-on mood may continue. US news-flow is in focus on the data front, with September’s PCE inflation and third-quarter Employment Cost Index figures on the docket. Improvements are expected on both fronts, which may amplify the probability of a December Fed rate hike in the minds of investors and push the US Dollar higher.

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Asia Session

GMTCCYEVENTACTEXPPREV
21:45NZDBuilding Permits (MoM) (SEP)-5.7%--5.3%
23:30JPYJobless Rate (SEP)3.4%3.4%3.4%
23:30JPYJob-To-Applicant Ratio (SEP)1.241.241.23
23:30JPYOverall Household Spending (YoY) (SEP)-0.4%1.1%2.9%
23:30JPYNatl CPI (YoY) (SEP)0.0%0.0%0.2%
23:30JPYNatl CPI Ex Fresh Food (YoY) (SEP)-0.1%-0.2%-0.1%
23:30JPYNatl CPI Ex Food, Energy (YoY) (SEP)0.9%0.9%0.8%
23:30JPYTokyo CPI (YoY) (OCT)0.1%0.0%-0.1%
23:30JPYTokyo CPI Ex-Fresh Food (YoY) (OCT)-0.2%-0.2%-0.2%
23:30JPYTokyo CPI Ex Food, Energy (YoY) (OCT)0.4%0.5%0.6%
00:00NZDANZ Activity Outlook (OCT)23.7-16.7
00:00NZDANZ Business Confidence (OCT)10.5--18.9
00:05GBPGfK Consumer Confidence (OCT)243
00:24AUDCBA/HIA House Affordability (3Q)78.3-81.6
00:30AUDPrivate Sector Credit (MoM) (SEP)0.8%0.5%0.6%
00:30AUDPrivate Sector Credit (YoY) (SEP)6.7%6.3%6.4%
00:30AUDPPI QoQ (3Q)0.9%-0.3%
00:30AUDPPI (YoY) (3Q)1.7%-1.1%
02:00NZDM3 Money Supply (YoY) (SEP)8.5%-9.0%
03:22JPYBOJ Annual Rise in Monetary Base¥80T¥80T¥80T
04:00JPYVehicle Production (YoY) (SEP)-2.6%--4.7%
05:00JPYHousing Starts (YoY) (SEP)2.6%5.8%8.8%
05:00JPYAnnualized Housing Starts (SEP)0.900M0.936M0.931M
05:00JPYConstruction Orders (YoY) (SEP)6.7%--15.6%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00EURGerman Retail Sales (MoM) (SEP)0.4%-0.6%Medium
07:00EURGerman Retail Sales (YoY) (SEP)4.1%2.5%Medium
08:00CHFKOF Leading Indicator (OCT)100.1100.4Low
09:00EURItalian Unemployment Rate (SEP P) 11.9%11.9%Low
09:30GBPLloyds Business Barometer (OCT)-42Low
10:00EUREurozone Unemployment Rate (SEP)11.0%11.0%Low
10:00EUREurozone CPI Estimate (YoY) (OCT)0.0%-0.1%Medium
10:00EUREurozone CPI Core (YoY) (OCT A) 0.9%0.9%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.07891.08721.09251.09551.10081.10381.1221
GBPUSD1.51341.52131.52611.52921.53401.53711.5450

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

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