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Australian Dollar Pullback May Continue as Risk Appetite Cools

Australian Dollar Pullback May Continue as Risk Appetite Cools

Talking Points:

  • Aussie Dollar underperforms amid risk aversion in overnight trade
  • Euro, US Dollar unlikely to find direction in CPI and UofM reports
  • Sentiment trends to remain in focus, futures hint at risk-off mood

The Australian Dollar underperformed in otherwise quiet overnight trade, with the sentiment-sensitive currency falling alongside share prices. The MSCI Asia Pacific equity index fell for a second consecutive day in a move that may reflect pre-positioning ahead of next week’s event risk.

The regional benchmark hit a two-month high mid-week. The absence of high-profile items on the docket may have inspired a round of precautionary profit-taking as investors rebalance exposure toward a more risk-neutral setting ahead of next week’s news flow, headlined by the FOMC policy announcement.

Looking ahead, the final revision of May’s German CPI figures seems unlikely to generate a significant response from the Euro considering the outcome’s limited implications for near-term ECB policy trends. A downtick on June’s University of Michigan gauge of US consumer confidence may likewise pass with little fanfare, with traders probably unwilling to commit to a directional bias on the US Dollar for now.

This leaves sentiment trends at the forefront. European and US stock index futures are pointing cautiously lower, hinting the risk-off bias may carry through in the final hours of the trading week. “Brexit”-related headline risk remains a wildcard as the fateful referendum looms ever-closer.

Track short-term trading patterns for FX, commodities and stock indexes with the GSI Indicator !

Asia Session

22:45NZDCard Spending Retail (MoM) (MAY)-0.3%0.5%0.8%
22:45NZDCard Spending Total (MoM) (MAY)-0.6%-1.3%
23:50JPYPPI (MoM) (MAY)0.2%0.1%-0.4%
23:50JPYPPI (YoY) (MAY)-4.2%-4.2%-4.2%
04:30JPYTertiary Industry Index (MoM) (APR)0.6%-0.7%

European Session

06:00EURGerman Wholesale Price Index (MoM) (MAY)-0.3%Low
06:00EURGerman Wholesale Price Index (YoY) (MAY)--2.7%Low
06:00EURGerman CPI (MoM) (MAY F)0.3%0.3%Medium
06:00EURGerman CPI (YoY) (MAY F)0.1%0.1%Medium
07:00EURECB's Weidmann Speaks in Eltville am Rhine --Low
08:30GBPConstruction Output SA (MoM) (APR)1.4%-3.6%Low
08:30GBPConstruction Output SA (YoY) (APR)-4.8%-4.5%Low
08:30GBPBoE/TNS Inflation Next 12 Mths (MAY)-1.8%Low
12:15EURECB's Constancio, Lane Speak --Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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