Forex Analysis: Risk Trends Reversal May Boost Yen, Bypass US Dollar
The Japanese Yen is poised to rise but the US Dollar may fail to capitalize as risk appetite suffers a setback across financial markets.
Talking Points
Aussie, Kiwi Dollars Rise on Risk Appetite and Supportive Data
US Consumer Confidence to Hit Five-Month Low in January
Sentiment Reversal May Boost Japanese Yen, Bypass US Dollar
The Australian and New Zealand Dollars outperformed on the back of a pickup in risk appetite as well as a round of supportive data in overnight trade. On the data front, December’s New Zealand Trade Balance report revealed an unexpected NZ$486 million monthly surplus while the year-to-date shortfall narrowed to –NZ$1.21 billion. Meanwhile, Australia’s NAB Consumer Confidence Index posted the largest monthly increase in over a decade. NAB chief economist Alan Oster attributed to “improvements in [global] financial and equity markets.”
Another quiet day of European event risk once again turns the spotlight on the US docket. January’s Consumer Confidence is in focus, with expectations pointing to a third consecutive decline to put the gauge at the lowest level in five months. S&P 500 index futures are pointing lower, arguing for a cautiously risk-averse mood ahead of the opening bell on Wall Street. Such an outcome may boost the Japanese Yen but parallel support for the US Dollar appears questionable. Indeed, correlation studies point to an unraveling of the link between the greenback and sentiment trends over recent months.
Asia Session:
GMT | CCY | EVENT | ACT | EXP | PREV |
21:45 | NZD | Trade Balance (NZ$) (DEC) | 486M | -105M | -590M (R+) |
21:45 | NZD | Trade Balance YTD (NZ$) (DEC) | -1208M | -1870B | -1393B (R+) |
21:45 | NZD | Imports (NZ$) (DEC) | 3.58B | 4.13B | 4.42B (R-) |
21:45 | NZD | Exports (NZ$) (DEC) | 4.07B | 3.98B | 3.83B (R+) |
23:00 | AUD | Conference Board Leading Index (NOV) | -0.2% | - | 0.2% |
0:30 | AUD | NAB Business Confidence (DEC) | 3 | - | -9 |
0:30 | AUD | NAB Business Conditions (DEC) | -4 | - | -6 |
5:00 | JPY | Small Business Confidence (JAN) | 44.3 | - | 43.8 |
Euro Session:
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
7:00 | EUR | German Import Price Index (MoM) (DEC) | -0.5% (A) | 0.0% | Low |
7:00 | EUR | German Import Price Index (YoY) (DEC) | 0.3% (A) | 1.1% | Low |
7:00 | EUR | German GfK Consumer Confidence Survey (FEB) | 5.8 (A) | 5.7 | Low |
7:45 | EUR | French Consumer Confidence Indicator (JAN) | 86.0 (A) | 86.0 | Low |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.3401 | 1.3480 |
GBPUSD | 1.5646 | 1.5774 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
To be added to Ilya's e-mail distribution list, please CLICK HERE
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.