15 Jun 2015
Weidmann speech Eyed in Europe, EZ Trade balance due
FXStreet (Mumbai) - The New Zealand dollar saw a partial recovery in Asia despite the downward revision of the consensus forecasts by the NZIER, while the Australian dollar turned lower ahead of the comments from RBA’s Kent. The USD/JPY pair stayed consolidated in the narrow band of 123.40-123.60 amid the lack of fresh fundamental triggers in Japan.
Key Headlines in Asia
Grexit not a sensible solution – Varoufakis
NZIER trims growth expectations
BOJ likely to expand stimulus in October – Reuters survey
Dominating themes in Asia – centered on JPY, AUD, NZD
In a quiet Asian session, a downward revision of the New Zealand growth forecasts by the NZIER hogged the limelight. The slightly weak forecast post last week’s rate cut by the RBNZ further underscored the growing divergence between the monetary policy path adopted by the US Fed and the RBNZ. Still, the NZD/USD pair managed to take back part of its losses to trade at 0.6976, down just 0.16%.
Meanwhile, the Aussie erased early gains ahead of the RBA assistant governor Kent’s speech. So far, the AUD/USD pair has not been able to extend the 1.5% gains seen in the last week on account of a break based weakness in the USD, and partly due to buying in the AUD/NZD cross. Moreover, the Antipodeans witnessed moderate weakness after 11-hour talks between Greece and creditors were said to have broken.
The Asian equities traded in line with the moderate weakness seen in the US equity futures on account of Greek concerns. Among the Asian indices, Shanghai composite and Hang Seng fell 1.5% and 1.35% respectively. Elsewhere, the ASX is down 0.40%, while the Nikkei shed 0.5% as the Japanese Yen recovered minor losses to trade largely unchanged on the day at 123.43.
Heading into Europe - centered on EUR, GBP
The Euroland economic calendar offers no first tier economic data releases today. The Eurozone trade balance figures for April are likely to be ignored by the markets. Investors would be more interested in hearing Bundesbank chief Weidmann’s take on the ongoing Greek issue. The EUR/USD pair other EUR crosses could be heavily influenced by news on Greece.
The EUR/USD clocked a low of 1.1193 on Greek impasse reports, before recovering to trade around 1.1215 levels. The minor relief rally could have been triggered by comments from Greek finance minister Varoufakis, who labeled Grexit as ‘not a sensible solution’.
Later in the US session, the monthly industrial production figures shall take the center stage. The USD could also be influenced by the yields on the 6-month and 3-month bill auction. The investors may stay cautious ahead of the FOMC rate decision due later this week.
USD to perform better going into FOMC – BBH
“Even though a rate hike by the FOMC next week is highly unlikely, it can be expected to recognize the reinvigorated economic momentum. Yellen will most likely try to keep the market focused on the data, not a particular time frame. Based on current information and the expected trajectory of economic data, a September lift-off remains the most likely scenario.”
EUR/USD Technicals
As per the research team at Ace Trader the downside bias in the EUR/USD remains intact.
“Although Friday's rally from 1.1151 to as high as 1.1297 (NY) signals 1st leg of correction from Wednesday's 3-week peak at 1.1387 has ended, intra-day gap-down open to 1.1208/09 in NZ on breakdown in Greek talk suggests downside bias remains.”
Key Headlines in Asia
Grexit not a sensible solution – Varoufakis
NZIER trims growth expectations
BOJ likely to expand stimulus in October – Reuters survey
Dominating themes in Asia – centered on JPY, AUD, NZD
In a quiet Asian session, a downward revision of the New Zealand growth forecasts by the NZIER hogged the limelight. The slightly weak forecast post last week’s rate cut by the RBNZ further underscored the growing divergence between the monetary policy path adopted by the US Fed and the RBNZ. Still, the NZD/USD pair managed to take back part of its losses to trade at 0.6976, down just 0.16%.
Meanwhile, the Aussie erased early gains ahead of the RBA assistant governor Kent’s speech. So far, the AUD/USD pair has not been able to extend the 1.5% gains seen in the last week on account of a break based weakness in the USD, and partly due to buying in the AUD/NZD cross. Moreover, the Antipodeans witnessed moderate weakness after 11-hour talks between Greece and creditors were said to have broken.
The Asian equities traded in line with the moderate weakness seen in the US equity futures on account of Greek concerns. Among the Asian indices, Shanghai composite and Hang Seng fell 1.5% and 1.35% respectively. Elsewhere, the ASX is down 0.40%, while the Nikkei shed 0.5% as the Japanese Yen recovered minor losses to trade largely unchanged on the day at 123.43.
Heading into Europe - centered on EUR, GBP
The Euroland economic calendar offers no first tier economic data releases today. The Eurozone trade balance figures for April are likely to be ignored by the markets. Investors would be more interested in hearing Bundesbank chief Weidmann’s take on the ongoing Greek issue. The EUR/USD pair other EUR crosses could be heavily influenced by news on Greece.
The EUR/USD clocked a low of 1.1193 on Greek impasse reports, before recovering to trade around 1.1215 levels. The minor relief rally could have been triggered by comments from Greek finance minister Varoufakis, who labeled Grexit as ‘not a sensible solution’.
Later in the US session, the monthly industrial production figures shall take the center stage. The USD could also be influenced by the yields on the 6-month and 3-month bill auction. The investors may stay cautious ahead of the FOMC rate decision due later this week.
USD to perform better going into FOMC – BBH
“Even though a rate hike by the FOMC next week is highly unlikely, it can be expected to recognize the reinvigorated economic momentum. Yellen will most likely try to keep the market focused on the data, not a particular time frame. Based on current information and the expected trajectory of economic data, a September lift-off remains the most likely scenario.”
EUR/USD Technicals
As per the research team at Ace Trader the downside bias in the EUR/USD remains intact.
“Although Friday's rally from 1.1151 to as high as 1.1297 (NY) signals 1st leg of correction from Wednesday's 3-week peak at 1.1387 has ended, intra-day gap-down open to 1.1208/09 in NZ on breakdown in Greek talk suggests downside bias remains.”