Talking Points:
- Australian Dollar May Bounce as Risk Appetite Recovers After Sharp Drop
- New Zealand Dollar Declines as Markets Position for RBNZ Rate Decision
- Euro, Yen Gain on Risk Aversion in Asia But Momentum May Be Fleeting
The New Zealand Dollar underperformed in overnight trade. The move tracked a drop in 3-month borrowing costs, hinting it may have reflected pre-positioning ahead of tomorrow’s RBNZ monetary policy announcement. Traders are pricing in a 64 percent probability of a 25 basis point rate cut, according to OIS-derived estimates.
The US Dollar likewise faced selling pressure as prices corrected after hitting a weekly high in yesterday’s session. The Euro and the Japanese Yen proved best-supported as risk aversion carried over from Wall Street onto Asian bourses, encouraging the unwinding of carry traders funded in the two low-yielding currencies.
Looking ahead, a quiet economic data docket in European and US hours seems likely to put sentiment trends at the forefront. S&P 500 futures are pointing firmly higher in late Asian trade, hinting a recovery in risk appetite may be afoot after the MSCI World Stock Index – a proxy for the daily ebb and flow of global investors’ confidence – dropped to a three-week low yesterday.
This may cap Euro and Yen gains while offering a lifeline to higher-yielding alternatives, such as the Australian Dollar. The currency completed its largest two-day loss in six weeks against its US counterpart at the close of yesterday’s session. We are looking to any bounce from here as a selling opportunity.
Losing Money Trading Forex? This Might Be Why.
Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 23:30 | AUD | Westpac Consumer Conf. Index (DEC) | 100.8 | - | 101.7 |
| 23:30 | AUD | Westpac Consumer Conf. (MoM) (DEC) | -0.8% | - | 3.9% |
| 23:50 | JPY | Machine Orders (MoM) (OCT) | 10.7% | -1.5% | 7.5% |
| 23:50 | JPY | Machine Orders (YoY) (OCT) | 10.3% | 0.6% | -1.7% |
| 23:50 | JPY | Money Stock M2 (YoY) (NOV) | 3.3% | 3.5% | 3.7% |
| 23:50 | JPY | Money Stock M3 (YoY) (NOV) | 2.7% | 2.8% | 2.9% |
| 00:30 | AUD | Home Loans (MoM) (OCT) | -0.5% | -1.0% | 2.0% |
| 00:30 | AUD | Investment Lending (OCT) | -6.1% | - | -8.2% |
| 00:30 | AUD | Owner-Occupier Loan Value (MoM) (OCT) | 0.4% | - | 3.1% |
| 01:30 | CNY | CPI (YoY) (NOV) | 1.5% | 1.4% | 1.3% |
| 01:30 | CNY | PPI (YoY) (NOV) | -5.9% | -6.0% | -5.9% |
| 06:00 | JPY | Machine Tool Orders (YoY) (NOV P) | -17.9% | - | -22.9% |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
|---|---|---|---|---|---|
| 06:45 | CHF | Unemployment Rate (NOV) | 3.4% | 3.3% | Medium |
| 06:45 | CHF | Unemployment Rate SA (NOV) | 3.4% | 3.4% | Medium |
| 07:00 | EUR | German Trade Balance (OCT) | 21.7B | 22.9B | Medium |
| 07:00 | EUR | German Current Account Balance (OCT) | 23.7B | 25.1B | Medium |
| 07:00 | EUR | German Exports SA (MoM) (OCT) | -0.6% | 2.6% | Low |
| 07:00 | EUR | German Imports SA (MoM) (OCT) | -1.0% | 3.6% | Low |
| 07:00 | EUR | German Labor Costs WDA (YoY) (3Q) | - | 3.1% | Low |
| 07:00 | EUR | German Labor Costs SA (QoQ) (3Q) | - | 0.9% | Low |
| 09:30 | GBP | BOE FPC Nov. Meeting Minutes | - | - | Medium |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.0729 | 1.0802 | 1.0847 | 1.0875 | 1.0920 | 1.0948 | 1.1021 |
| GBP/USD | 1.4801 | 1.4905 | 1.4956 | 1.5009 | 1.5060 | 1.5113 | 1.5217 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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