16 Jun 2015
CPI day ahead in Europe
FXStreet (Mumbai) - The Australian dollar struggled to hold on to its gains in the Asian session after the RBA minutes showed the policy makers are concerned regarding the strength in the Aussie. The New Zeland dollar continues to reel under pressure as investors await the FOMC rate decision after RBNZ surprise markets by announcing rate cut last week. Meanwhile, the Japanese Yen came under pressure after the BOJ governor Kuroda clarified that he did not intend the influence the nominal exchange rate last week. The USD/JPY pair rise to 123.80 before paring gains to trade at 123.56.
Key Headlines in Asia
Greece could default without exiting Euro?
Didn’t mean to predict on Yen outlook – BOJ’s Kuroda
Dominating themes in Asia – centered on JPY, AUD, NZD
The Japanese Yen dominated the Asian session today, as it fell against the USD on Kuroda’s clarification over his stance on the Yen nominal exchange rate. Kuroda said he does not intend to influence the nominal exchange rate and is not against further nominal depreciation either. The USD/JPY pair shot higher to 123.80, before cooling to 123.60 levels.
Meanwhile, the AUD/USD struggled to hold onto gains and the AUD/NZD failed to extend gains over and above 1.11 levels after the dovish RBA minutes restricted gains in the AUD. The minutes showed policy makers are in favor of easy monetary policy since the AUD is still stronger than desired. Still, the minutes lacked an explicit easing bias, due to which the currency has been largely unchanged on the day against the USD and NZD.
The Asian equities suffered losses, taking cues from the overnight risk aversion on the Wall Street. The investors were cautious ahead of the FOMC rate decision tomorrow. The Greek impasse is also weighing over the investor sentiment. The MSCI Asia Pacific Index fell a second day, losing 0.4%. The Nikkei fell 0.63%; unable to recover losses even though the Yen weakened on Kuroda’s comments.
Heading into Europe - centered on EUR, GBP
The Euroland economic calendar offers final CPI readings for May. The official data in Germany are seen confirming CPI at the preliminary estimate at 0.7% year-on-year. In the UK, the year-on-year CPI seen rebounding 0.1% in May from a 0.1% contraction in April. Higher than expected inflation prints are largely expected to strengthen the European currencies against the USD. More importantly, a higher inflation in Germany could renew the sell-off in the Bunds, leading to a rise in the yields and Euro.
Apart from the CPI figures, the investors shall also keep an eye on the Greek impasse. The Eurozone Zew survey data could easily get overshadowed amid CPI figures and Greek issue. The EUR/USD pair currently trades largely unchanged on the day at 1.1279, while the GBP/USD trades above 1.56 levels.
USD should resume its uptrend – JPM
“The USD Index has been moving sideways, as German rates are leading the global bond market sell-off. However, with Treasuries expected to start driving global rate moves sometime this summer, the dollar should resume its uptrend. Even though this Fed hiking cycle will be the most anticipated in at least three decades, it’s hard to see the dollar failing to rally as we approach Fed lift-off, when market liquidity will be tested properly.”
GBP/USD orders
As per the research team at Ace Trader, “At present, bids are noted at 1.5590-80 and around 1.5570 with stops below 1.5550, whilst offers are reported at 1.5620/25, 1.5645/50 and then 1.5670-80 with stops building just above 1.5700.”
Key Headlines in Asia
Greece could default without exiting Euro?
Didn’t mean to predict on Yen outlook – BOJ’s Kuroda
Dominating themes in Asia – centered on JPY, AUD, NZD
The Japanese Yen dominated the Asian session today, as it fell against the USD on Kuroda’s clarification over his stance on the Yen nominal exchange rate. Kuroda said he does not intend to influence the nominal exchange rate and is not against further nominal depreciation either. The USD/JPY pair shot higher to 123.80, before cooling to 123.60 levels.
Meanwhile, the AUD/USD struggled to hold onto gains and the AUD/NZD failed to extend gains over and above 1.11 levels after the dovish RBA minutes restricted gains in the AUD. The minutes showed policy makers are in favor of easy monetary policy since the AUD is still stronger than desired. Still, the minutes lacked an explicit easing bias, due to which the currency has been largely unchanged on the day against the USD and NZD.
The Asian equities suffered losses, taking cues from the overnight risk aversion on the Wall Street. The investors were cautious ahead of the FOMC rate decision tomorrow. The Greek impasse is also weighing over the investor sentiment. The MSCI Asia Pacific Index fell a second day, losing 0.4%. The Nikkei fell 0.63%; unable to recover losses even though the Yen weakened on Kuroda’s comments.
Heading into Europe - centered on EUR, GBP
The Euroland economic calendar offers final CPI readings for May. The official data in Germany are seen confirming CPI at the preliminary estimate at 0.7% year-on-year. In the UK, the year-on-year CPI seen rebounding 0.1% in May from a 0.1% contraction in April. Higher than expected inflation prints are largely expected to strengthen the European currencies against the USD. More importantly, a higher inflation in Germany could renew the sell-off in the Bunds, leading to a rise in the yields and Euro.
Apart from the CPI figures, the investors shall also keep an eye on the Greek impasse. The Eurozone Zew survey data could easily get overshadowed amid CPI figures and Greek issue. The EUR/USD pair currently trades largely unchanged on the day at 1.1279, while the GBP/USD trades above 1.56 levels.
USD should resume its uptrend – JPM
“The USD Index has been moving sideways, as German rates are leading the global bond market sell-off. However, with Treasuries expected to start driving global rate moves sometime this summer, the dollar should resume its uptrend. Even though this Fed hiking cycle will be the most anticipated in at least three decades, it’s hard to see the dollar failing to rally as we approach Fed lift-off, when market liquidity will be tested properly.”
GBP/USD orders
As per the research team at Ace Trader, “At present, bids are noted at 1.5590-80 and around 1.5570 with stops below 1.5550, whilst offers are reported at 1.5620/25, 1.5645/50 and then 1.5670-80 with stops building just above 1.5700.”