Yen May Resume Rise as Aussie, NZ Dollars Fall as Market Mood Sours

2018-10-24 06:30:00 Ilya Spivak, Head Strategist, APAC

TALKING POINTS – YEN, AUSTRALIAN DOLLAR, STOCKS, RISK AVERSION, EURO, PMI

Yen down, Aussie and NZ Dollars as corrective flows define APAC trade
S&P 500 futures point sharply lower, hinting risk-off trade set to return
Euro unlikely to find lasting direction cues from October PMI roundup

The sentiment-geared Australian and New Zealand Dollars traded higher while the anti-risk Japanese Yen retreated as the G10 FX currencies retraced following yesterday’s market rout. These moves may soon reverse course however as futures tracking the bellwether S&P 500 index point convincingly lower before the opening bell on Wall Street, hinting another bout of risk aversion is in the cards ahead.

EURO UNLIKELY TO FIND CATALYST IN PMI DATA

A preliminary look at October’s Eurozone PMI survey roundup headlines the economic calendar in European trade. The regional composite gauge is expected to show that manufacturing- and service-sector activity growth slowed last month, marking a second consecutive decline.

Absent an improbably dramatic deviation from forecasts, this data is unlikely to mean much for the Euro given its limited implications for near-term ECB policy, which seems to be on autopilot at least through year-end. Even if that were not the case however, follow-through would be unlikely as investors withhold conviction ahead of Thursday’s policy announcement.

See our forecasts for currencies, commodities and equities to learn what will drive prices in Q4!