FXStreet (Mumbai) – The Kiwi posed a minor recovery in Asia after the recent slump to five year lows on Reserve Bank of New Zealand’s (RBNZ) unexpected interest rate cut on Thursday. While AUD/USD consolidates previous losses, shrugging off upbeat Aus jobs data. The dollar-yen pair trades muted around 123.50 levels awaiting fresh cues from the upcoming US macro releases later today.
Key headlines in Asia
New Zealand’s manufacturing sector down a gear in May
Germany prepares for a Greek bankruptcy, capital controls/debt haircut discussed
BOJ Harada talks down imminent further easing, JPY positive
Dominating themes in Asia – centered on JPY, AUD, NZD
A quiet Asian session, with no major economic data reported and Asian equities trading mixed amid lack of fresh fundamental triggers. The US dollar took a breather in its rally following better than expected US retail sales data which added to the increased speculations around July/Sept Fed rate hike.
While the Antipodean currencies traded lacklustre, with the New Zealand dollar outpacing its OZ counterpart on a mild rebound after printing fresh five year lows below 0.70 barrier following further easing bias the RBNZ. The central bank slashed the official cash rate OCR to 3.25% on Thursday. The Aussie extends weakness this session, giving back impressive Aus employment data-backed gains and remains pressure after the greenback regained strength on above estimates US data.
Heading into Europe – centered on EUR, GBP
A data light EUR calendar, with industrial production from the Euro zone and German WPI releases to drive the Europe. While the latest developments around Greece debt concerns are likely to dominate in the day ahead, keeping EUR/USD undermined.
Industrial production in the euro zone is seen as advancing 0.4% m/m in April, following a 0.3% decline reported in March, while growing 1.1% when measured annually, compared to a 1.8% gain recorded in the third month of 2015.
Later in the US session, US PPI and consumer sentiment data will be closely watched in order to confirm the recent signs of strengthening US economy which calls for earlier Fed rate hike.
Alfonso Esparza, Senior Currency Strategist at MarketPulse notes, “After clearing the hurdle of retails sales, the U.S. economy now faces a higher obstacle with the release of the producer-price index (PPI).”
“Prices of American goods have been flat for most of 2014, and they decreased with the impact of lower energy prices. PPI is forecast to grow 0.4%, which would offset the decrease by the same rate last month.”
“Meanwhile, the preliminary consumer sentiment survey conducted by the University of Michigan (UoM) has shown consistent improvement after touching a yearly low of 79.2 in August, 2014. External factors have affected this indicator as it has been underperforming to forecasts. The survey is widely regarded as a leading indicator of American consumer spending. This time out, the UoM Consumer Sentiment Index is expected to be 91.3, a slight rise from the 90.7 posted last month.”
EUR/USD Technicals
Research Team at AceTrader believes “Euro’s retreat from Wednesday’s high of 1.1387 to 1.1181 yesterday following the release of upbeat U.S. retail sales reports signals recent upmove from May’s bottom at 1.0819. This has made a temporary top there and as long as 1.1332 (yesterday’s high) holds, choppy trading with downside bias remains. However below 1.1178/81 would bring another corrective decline towards 1.1136 later.”
“On the upside, only a move back above 1.1132 would indicate pullback over and bring re-test of 1.1387 but firm break needed to encourage for gain towards May’s 3-month peak at 1.1467.”
(Market News Provided by FXstreet)