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Yen Falls as Aussie Dollar Gains in Risk-On Trade, NZ Dollar Lags

Yen Falls as Aussie Dollar Gains in Risk-On Trade, NZ Dollar Lags

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Japanese Yen falls, Aussie Dollar gains as stocks rise in Asian trade
  • NZ Dollar lags as FinMin English stokes RBNZ rate cut speculation
  • S&P 500 futures suggest risk appetite recovery to see follow-through

The Yen underperformed in overnight trade as Japan’s benchmark Nikkei 225 stock index advanced, sapping demand for the anti-risk currency. The risk-on mood bolstered the sentiment-sensitive Australian Dollar, which tracked upward alongside share prices.

The New Zealand Dollar failed to capitalize however, trading downward parallel with a decline in the island nation’s bond yields that hinted at building RBNZ rate cut speculation. Traders now price in a 76 percent probability of a 25 basis point cut at next month’s policy meeting.

The dovish shift in the outlook may have been triggered by comments by New Zealand Finance Minister Bill English, who said the central bank has the “tool kit” to address the to address the buoyant Auckland housing marketand has consistently signaled its intent to take the issue seriously.

This may have implied that the RBNZ will continue to use macro-prudential tools to cool property prices, implying frothy conditions there will not derail plans to reduce the baseline cash rate. English also alluded that the RBNZ may present its strategy in the Financial Stability Report due for release tomorrow.

Looking ahead, a quiet economic calendar is likely to put risk sentiment trends in the spotlight. S&P 500 futures are pointing decidedly higher, hinting that the risk-on mood seen overnight is likely to carry forward. This bodes well for commodity-bloc FX and may continue to punish anti-risk alternatives, notably the Yen.

Are FXCM traders buying or selling the Japanese Yen? Find out here!

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:00

NZD

ANZ Truckometer Heavy (MoM) (APR)

-2.4%

-

3.3%

22:00

USD

Fed's Williams Participates in Online Q&A

-

-

-

22:45

NZD

Card Spending Retail (MoM) (APR)

0.9%

0.5%

0.1%

22:45

NZD

Card Spending Total (MoM) (APR)

1.5%

-

0.5%

23:01

GBP

BRC Sales Like-For-Like (YoY) (APR)

-0.9%

0.5%

-0.7%

23:30

AUD

Weekly Consumer Confidence Index (MAY 8)

113.9

-

113.9

01:30

CNY

CPI (YoY) (APR)

2.3%

2.3%

2.3%

01:30

CNY

PPI (YoY) (APR)

-3.4%

-3.7%

-4.3%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

05:45

CHF

Unemployment Rate (APR)

3.5% (A)

3.6%

Medium

05:45

CHF

Unemployment Rate SA (APR)

3.5% (A)

3.4%

Medium

06:00

EUR

German Industrial Production (MoM) (MAR)

-1.3% (A)

-0.7%

Medium

06:00

EUR

German Industrial Production (YoY) (MAR)

0.3% (A)

2.0%

Medium

06:00

EUR

German Trade Balance (MAR)

26.0b (A)

20.2b

Medium

06:00

EUR

German Current Account Balance (MAR)

30.4b (A)

21.1b

Low

06:00

EUR

German Exports SA (MoM) (MAR)

1.9% (A)

1.3%

Low

06:00

EUR

German Imports SA (MoM) (MAR)

-2.3% (A)

0.1%

Low

07:15

USD

Fed's Dudley Speaks in Zurich

-

-

Medium

08:30

GBP

Visible Trade Balance (£, Mn) (MAR)

-11450

-11964

Medium

08:30

GBP

Trade Balance Non EU (£, Mn) (MAR)

-3600

-3357

Low

08:30

GBP

Trade Balance (£, Mn) (MAR)

-4200

-4840

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.1305

1.1349

1.1366

1.1393

1.1410

1.1437

1.1481

GBP/USD

1.4211

1.4316

1.4361

1.4421

1.4466

1.4526

1.4631

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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