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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

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

GMTCCYEVENTACTEXPPREV
22:00NZDANZ Truckometer Heavy (MoM) (APR)-2.4%-3.3%
22:00USDFed's Williams Participates in Online Q&A ---
22:45NZDCard Spending Retail (MoM) (APR)0.9%0.5%0.1%
22:45NZDCard Spending Total (MoM) (APR)1.5%-0.5%
23:01GBPBRC Sales Like-For-Like (YoY) (APR)-0.9%0.5%-0.7%
23:30AUDWeekly Consumer Confidence Index (MAY 8)113.9-113.9
01:30CNYCPI (YoY) (APR)2.3%2.3%2.3%
01:30CNYPPI (YoY) (APR)-3.4%-3.7%-4.3%

European Session

GMTCCYEVENTEXP/ACTPREVIMPACT
05:45CHFUnemployment Rate (APR)3.5% (A)3.6%Medium
05:45CHFUnemployment Rate SA (APR)3.5% (A)3.4%Medium
06:00EURGerman Industrial Production (MoM) (MAR)-1.3% (A)-0.7%Medium
06:00EURGerman Industrial Production (YoY) (MAR)0.3% (A)2.0%Medium
06:00EURGerman Trade Balance (MAR)26.0b (A)20.2bMedium
06:00EURGerman Current Account Balance (MAR)30.4b (A)21.1bLow
06:00EURGerman Exports SA (MoM) (MAR)1.9% (A)1.3%Low
06:00EURGerman Imports SA (MoM) (MAR)-2.3% (A)0.1%Low
07:15USDFed's Dudley Speaks in Zurich --Medium
08:30GBPVisible Trade Balance (£, Mn) (MAR)-11450-11964Medium
08:30GBPTrade Balance Non EU (£, Mn) (MAR)-3600-3357Low
08:30GBPTrade Balance (£, Mn) (MAR)-4200-4840Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EUR/USD1.13051.13491.13661.13931.14101.14371.1481
GBP/USD1.42111.43161.43611.44211.44661.45261.4631

--- 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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