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.
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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 (ÂŁ, Mn) (MAR) | -11450 | -11964 | Medium |
| 08:30 | GBP | Trade Balance Non EU (ÂŁ, Mn) (MAR) | -3600 | -3357 | Low |
| 08:30 | GBP | Trade Balance (ÂŁ, 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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