TALKING POINTS – YEN, NZ & US DOLLARS, IFO, STOCKS
- Yen may extend decline as market-wide risk appetite improves
- Kiwi Dollar down as RBNZ rate hike expectations deteriorate
- Euro[1] may not find strong motivation in German IFO statistics
The anti-risk Yen suffered as risk appetite swelled in Asia Pacific trade, with bourses in Japan, Australia and China posting confident gains. The New Zealand Dollar[2] underperformed however, sinking alongside local bond yields. The move speaks to ebbing RBNZ rate hike prospects but a clear-cut catalyst for the shift in baseline policy bets is not readily apparent. Tightening is not priced in until mid-2019.
Looking ahead, a tame European data docket seems unlikely to provide directional conviction. Germany’s IFO survey is perhaps the most eye-catching bit. The headline business confidence gauge is seen falling for the fifth consecutive month, underscoring some of reasoning behind the recent dovish shift in ECB policy bets. Euro follow-through ahead of the coming Governing Council meeting however.
The US calendar is even sparser, which may leave sentiment trends to dictate the near-term trajectory. S&P 500[3] futures are pointing convincingly higher ahead of the opening bell on Wall Street, hinting that a “risk-on” mood may prevail. That bodes most obviously ill for the Japanese unit. Meanwhile, the US Dollar[4] may continue to march higher, if for reason better than the absence of a substantive road-block.
See our quarterly FX market forecast[5]s to learn what will drive prices through mid-year!
Asia Pacific Trading Session
European Trading Session
** All times listed
