Talking Points:
- Yen gains, Aussie Dollar slumps as risk aversion returns overnight
- NZ Dollar gains as RBNZ opts against setting the stage for rate cuts
- Risk-off dynamics seen ahead as markets eye BOE Inflation Report
The anti-risk Japanese Yen traded higher while the sentiment-anchored Australian Dollar declined as stocks declined in overnight trade. The New Zealand Dollar diverged from broader trends in market mood for a second day, rising following the release of the RBNZ Financial Stability Report and subsequent commentary from Governor Graeme Wheeler.
The central bank signaled its concern about runway housing prices in Auckland and said it was seriously considering further macro-prudential measures to cool conditions, but pointedly opted against unveiling anything actionable (including a clear-cut timeline for future policy). This sent the Kiwi higher as markets unwound bets on an imminent policy response that would open the door for further RBNZ interest rate cuts stoked by yesterday’s comments from Finance Minister Bill English.
Looking ahead, a quiet economic data docket is likely to keep risk appetite trends at the forefront. S&P 500 futures are pointing meaningfully lower, hinting at a corrective decline after yesterday’s session produced the largest daily gain in a month. The deliberative tone may be reinforced by traders’ hesitation to commit to a firm directional bias ahead of critical event risk posted by the upcoming release of the Bank of England Quarterly Inflation Report. Traders will comb through the document for clues about officials’ views on the likely impact of the much-anticipated Brexit referendum due next month.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 21:00 | NZD | RBNZ Publishes Financial Stability Report (FSR) | -- | -- | -- |
| 23:00 | NZD | RBNZ's Wheeler News Conference on FSR | -- | -- | -- |
| 23:27 | NZD | REINZ House Sales (YoY) (APR) | 18.4% | -- | 8.2% |
| 23:50 | JPY | Official Reserve Assets ($) (APR) | 1262.5b | -- | 1262.1b |
| 0:30 | AUD | Westpac Consumer Conf Index (MAY) | 103.2 | -- | 95.1 |
| 0:30 | AUD | Westpac Consumer Conf SA (MoM) (MAY) | 8.5% | -- | -4.0% |
| 1:10 | NZD | RBNZ's Wheeler at Parliament Committee on FSR | -- | -- | -- |
| 1:30 | AUD | Home Loans (MoM) (MAR) | -0.9% | -1.5% | 0.9% |
| 1:30 | AUD | Investment Lending (MAR) | 1.5% | -- | 3.1% |
| 1:30 | AUD | Owner-Occupier Loan Value (MoM) (MAR) | -1.2% | -- | 1.7% |
| 5:00 | JPY | Leading Index CI (MAR P) | 98.4 | 96.3 | 96.8 |
| 5:00 | JPY | Coincident Index (MAR P) | 111.2 | 111.2 | 110.7 |
European Session
| GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
|---|---|---|---|---|---|
| 8:30 | GBP | Industrial Production (MoM) (MAR) | 0.3% (A) | -0.3% | Medium |
| 8:30 | GBP | Industrial Production (YoY) (MAR) | -0.2% (A) | -0.5% | Medium |
| 8:30 | GBP | Manufacturing Production (MoM) (MAR) | 0.1% (A) | -1.1% | Medium |
| 8:30 | GBP | Manufacturing Production (YoY) (MAR) | -1.9% (A) | -1.8% | Medium |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.1278 | 1.1329 | 1.1351 | 1.1380 | 1.1402 | 1.1431 | 1.1482 |
| GBP/USD | 1.4258 | 1.4347 | 1.4395 | 1.4436 | 1.4484 | 1.4525 | 1.4614 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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