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Yen in Focus as Sentiment Trends Drive Currency Market Action

Yen in Focus as Sentiment Trends Drive Currency Market Action

Talking Points:

  • Yen moves may take top billing as risk trends drive price action
  • Aussie Dollar drops as soft retail sales data hurts RBA outlook
  • NZ Dollar declines as sentiment sours in Asian trading session

It is another quiet day ahead on the European and US economic data front. Meanwhile, a loaded docket of Fed commentary may pass with little incident considering investors’ near-term policy bets are seemingly locked in. The probability of a June rate hike implied in Fed Funds futures is now 100 percent.

That leaves risk sentiment trends to set the agenda. What this means is unclear however. S&P 500 futures, a baseline for overall risk appetite, are trading flat before the opening bell in Europe. Swings on this front may be most clearly seen in the Yen. It might fall if traders are upbeat or rise if the mood sours.

The Australian Dollar underperformed in otherwise quiet Asian trade. The drop followed disappointing retail sales data and tracked a slump in local bond yields, hinting the figures inspired a dovish shift in investors’ RBA policy outlook. As it stands, investors are not pricing in a rate hike at least through 2017.

The New Zealand Dollar likewise declined. The sentiment-sensitive currency fell as most Asian stocks traded lower, pointing to risk aversion as the catalyst. The MSCI Asia Pacific regional equity benchmark index fell 0.3 percent. Follow-through may be limited however as the RBNZ rate decision looms ahead.

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Asia Session

European Session

** All times listed in GMT. See the full DailyFX economic calendar here.

--- 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.