FXStreet (Mumbai) – The yen regained lost ground somewhat and emerged the strongest across the FX board mainly driven by Japan’s CPI figures which bettered expectations. The Aussie was also trading higher largely on a correction following the recent weakness. On the other hand, NZD/USD was the main laggard ad lost 0.72 handle after NZ business confidence eased in May while inflation expectations hit a new low.
Key headlines in Asia
Japanese inflation well off BOJ target
Japan EcoMin: Yen has not hit excessively weak level
Australia Private Sector Credit (MoM) registered at 0.3%, below expectations (0.5%) in April
NZ ANZ business confidence recedes in May
Dominating themes in Asia – centered on JPY, AUD, NZD
A data-filled Asian, with upbeat Japanese Core inflation print keeping the yen underpinned versus the US dollar. While Japanese stocks trades subdued amid stronger yen and falling Chinese equities. The US dollar extended its offered tone as traders remain nervous ahead of US Q1 GDP data due later today.
The Australian dollar was seen extending its recovery mode from fresh six week lows reached just ahead of 0.76 handle and now struggles around 0.7660. While the Kiwi pair lost the most this session amid renewed RBNZ rate cut chatter following discouraging business confidence and inflation expectation surveys released today.
Heading into Europe – centered on EUR, GBP
A fairly light European session ahead, with German retail sales and EMU money supply data to fill in the macro-economic space. While markets closely monitor developments between Greece and its international creditors while G7 finance ministers’ meetings continue for the final day.
German retail sales is expected to rise 1.0% MoM and show an increase of only 2.5% YoY. Eurozone M3 data which has been on a positive trend and is expected to continue to accelerate to 4.9% YoY in April and 4.5% on a 3MMA basis.
Analysts at Rabobank explain, If it wasn’t for the fact that we’ve only just started QE, and that the M3 uptick is due to it, anyone might think it would be time to stop it again soon.”
The major highlight for today’s trading is likely to be the US Q1 GDP numbers scheduled to be released later in the NA session. Markets are now predicting a 0.8% annualized contraction in economic output in the three months to March. The main drivers of the downgrade are seen as the widening March trade gap, and a much smaller inventory build.
Bank of America Merrill Lynch economists said in a recent note, “The largest revision comes from inventories which can explain 0.6 percentage points of the revision.”
(Market News Provided by FXstreet)