FXStreet (Mumbai) – The Kiwi was relentlessly sold-off in Asia, dragging its Oz counterpart lower as well; mainly driven by below expectations NZ Q1 GDP data which fuelled further RBNZ rate cut bets. While the yen gained the most after the greenback came under selling pressure following the latest FOMC statement which aims to begin policy normalization around September.
Key headlines in Asia
NZ Q1 GDP misses expectations, grew at the weakest pace in 2 yrs
NZD/USD deep in red circa 0.69 – at fresh 5-yr lows
China home prices fall 5.7% y/y in May
Dominating themes in Asia – centered on JPY, AUD, NZD
Broad based US dollar weakness remained the underlying theme in a rather calm Asian session following dovish FOMC statement released on Wednesday. While Asian markets mostly trading lower after the US Fed signaled that the first rate hike was still likely to occur later this year. Nikkei led the Asian stocks lower, tanking nearly 1% to trade just ahead of 20k marker.
Brian Martin of ANZ noted, “Whilst the market read the reduction in interest rate expectations for 2016 and 2017 as dovish, there was little else really new,” “The Summary of Economic Projections points to the normalization process starting in the not too distant future.”
Despite broad USD softness, the Antipodean currencies were heavily offered this session, with the New Zealand dollar emerging the biggest loser. The Kiwi witnessed sharp losses and dropped more than a percent following weak Q1 GDP results which showed that New Zealand’s economy expanded at the weakest pace in two years last quarter as dairy and mining output slumped, increasing the likelihood that the Reserve Bank of New Zealand (RBNZ) will cut interest rates for the second time in a row in July.
Heading into Europe – centered on EUR, GBP
A much awaited European session, as markets monitor Greece headlines ahead of Euro zone Finance Ministers’ meeting in Luxembourg later today. While traders anticipate some positive update on Greece debt repayments to its international creditors after lack of progress seen earlier this week. ECB President Mario Draghi and ECB policymaker Benoit Cœuré are also scheduled to attend.
On the data space, the UK will report May retail sales figures, with monthly figures weaker compared to those reported a month ago. Growth of 0.2% is expected when measured month-on-month, while 5.0% is expected on an annual basis.
Meanwhile, the Swiss National Bank’s (SNB) monetary policy assessment will also be closely watched, as the Central bank is expected to refrain from implementing any changes in its benchmark interest rate and leave it below zero through most of 2016. The SNB will also publish new growth and inflation projections.
The interest rate to be charged on sight deposit account balances is now at a record low of -0.75%. The target range for the three-month Libor is also in negative territory, currently at between –1.25% and −0.25%.
Heading in to North America, traders have a busy session, with a deluge of US economic releases, including US CPI, weekly jobless claims, current account and Philly Fed Manufacturing gauge, to shape up further US dollar moves. While, US CPI figures are expected to remain the major highlight in the US session, with the print expected to show a pick up in price pressure to 0.5% m/m in May from 0.1% booked in April. While the Core CPI figures is expected to show a slight deceleration to 0.2% m/m in May from a reading of 0.3% seen in April.
(Market News Provided by FXstreet)