Australian Dollar May Bounce as Risk Appetite Recovers

2015-12-09 06:38:00

Ilya Spivak, Head Strategist, APAC

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