Aussie Dollar May Rise as Yen Retreats in BOE, NFP Pregame

2016-02-03 05:07:00

Talking Points:

Aussie Dollar declines, Yen gains as Asia follows Wall Street risk-off lead
Sentiment may firm if UK, US news-flow bolster dovish Fed and BOE bets
Pre-positioning for BOE rate decision, NFP data may boost risk appetite

The return of risk aversion carried over from US hours and into Asian trade. The sentiment-linked Australian and Canadian Dollars are underperforming, with prices tracking steep declines across regional stock exchanges. The anti-risk Japanese Yen is trading broadly higher.

The New Zealand Dollar has managed to diverge, registering modest gains following a better-than-expected set of fourth-quarter employment figures. The jobless rate unexpectedly fell to a seven-year low of 5.3 percent. The Kiwi rose alongside front-end bond yields, hinting the upbeat data release weighed against RBNZ rate cut speculation.

Looking ahead, UK PMI figures and the US ADP employment report are in focus. Both releases are likely to be analyzed through the prism of monetary policy expectations ahead of the BOE rate decision on Thursday and the official set of US jobs figures on Friday. Soft results that fuel hopes for delayed stimulus withdrawal are likely to boost risk appetite, trimming losses in commodity FX and capping Yen gains. Alternatively, upbeat numbers may amplify risk-off momentum.

Portfolio readjustment may be another potent catalyst for a recovery in risk appetite. Traders are unlikely to want to carry aggressive directional exposure into high-profile event risk in the final 48 hours of the trading week. This means that a move to rebalance toward neutral after yesterday’s aggressive risk-off push pay fuel a rebound in sentiment-geared assets.

DailyFX analysts expected the selloff in early 2016. See our forecasts to find out what is likely next!

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:45	NZD	Unemployment Rate (4Q)	5.3%	6.1%	6.0%
21:45	NZD	Employment Change (QoQ) (4Q)	0.9%	0.8%	-0.5%
21:45	NZD	Employment Change (YoY) (4Q)	1.3%	1.1%	1.5%
21:45	NZD	Participation Rate (4Q)	68.4%	68.9%	68.7%
21:45	NZD	Pvt Wages Ex Overtime (QoQ) (4Q)	0.4%	0.5%	0.4%
21:45	NZD	Pvt Wages Inc Overtime (QoQ) (4Q)	0.4%	0.5%	0.4%
21:45	NZD	Average Hourly Earnings (QoQ) (4Q)	0.2%	0.5%	0.9%
22:30	AUD	AiG Perf of Services Index (JAN)	48.4	-	46.3
00:00	NZD	RBNZ’s Wheeler Speaks in Christchurch	-	-	-
00:01	GBP	BRC Shop Price Index (YoY) (JAN)	-1.8%	-	-2.0%
00:30	AUD	Trade Balance (DEC)	-3535m	-2450m	-2727m
00:30	AUD	Building Approvals (MoM) (DEC)	9.2%	4.5%	-12.4%
00:30	AUD	Building Approvals (YoY) (DEC)	-2.5%	-7.2%	-7.6%
01:45	CNH	Caixin China PMI Services (JAN)	52.4	-	50.2
01:45	CNH	Caixin China PMI Composite (JAN)	50.1	-	49.4
02:00	JPY	Nikkei Japan PMI Services (JAN)	52.4	-	51.5
02:00	JPY	Nikkei Japan PMI Composite (JAN)	52.6	-	52.2
02:30	JPY	BOJ Kuroda speaks in Tokyo	-	-	-
05:00	JPY	Consumer Confidence Index (JAN)	42.5	42.5	42.7

European Session

GMT	CCY	EVENT	EXP		IMPACT
08:45	EUR	Markit/ADACI Italy Composite PMI (JAN)	-	56.0	Low
08:45	EUR	Markit/ADACI Italy Services PMI (JAN)	54.0	55.3	Low
08:50	EUR	Markit France Services PMI (JAN F)	50.6	50.6	Low
08:50	EUR	Markit France Composite PMI (JAN F)	50.5	50.5	Low
08:55	EUR	Markit Germany Services PMI (JAN F)	55.4	55.4	Medium
08:55	EUR	Markit/BME Germany Composite PMI (JAN F)	54.5	54.5	Medium
09:00	EUR	Markit Eurozone Services PMI (JAN F)	53.6	53.6	Medium
09:00	EUR	Markit Eurozone Composite PMI (JAN F)	53.5	53.5	Medium
09:30	GBP	Official Reserves Changes ($) (JAN)	-	527m	Low
09:30	GBP	Markit/CIPS UK Services PMI (JAN)	55.4	55.5	Medium
09:30	GBP	Markit/CIPS UK Composite PMI (JAN)	55.0	55.3	Medium
10:00	EUR	Eurozone Retail Sales (MoM) (DEC)	0.3%	-0.3%	Low
10:00	EUR	Eurozone Retail Sales (YoY) (DEC)	1.5%	1.4%	Low