Aussie and NZ Dollars Rise, Yen Drops as China Expands Stimulus
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Talking Points:
Aussie and Kiwi Dollars Rise, Yen Drops as China Expands Stimulus Effort
Euro Unlikely to Find a Lasting Catalyst in German IFO Survey Outcome
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The Australian and New Zealand Dollars outperformed in overnight trade after China expanded monetary stimulus efforts, cutting its one-year lending rate by 40 basis points to 5.6 percent. The East Asian giant is Australia and New Zealand’s largest export market so a more aggressive pro-growth effort there bodes well for the two Oceanic countries’ cross-border sales prospects, which is in turn supportive for overall growth and monetary policy bets.
The Japanese Yen proved weakest on the session as China’s move lifted spirits across Asian stock exchanges, denting demand for the safety-linked currency. The MSCI Asia Pacific regional benchmark stock index (excluding Japan, where markets are closed for a holiday) jumped 1.2 percent. The Yen lost as much as 0.5 percent on average against its leading counterparts.
Germany’s IFO Survey of business confidence headlines the economic calendar in European trading hours. The headline Business Climate gauge is expected to edge down to 103.0 in November, marking the weakest reading since December 2012. The outcome’s impact on the Euro may prove lackluster however given its limited implications for the near-term trajectory of ECB policy. Indeed, the central bank is probably in wait-and-see mode for now as Mario Draghi and company continue to implement and evaluate the medley of stimulus measures introduced over recent months.
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Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
21:45 | NZD | Net Migration (OCT) | 5250 | - | 4670 |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
9:00 | EUR | German IFO – Expectations (NOV) | 95.5 | 98.3 | Medium |
9:00 | EUR | German IFO - Business Climate (NOV) | 103.0 | 103.2 | Medium |
9:00 | EUR | German IFO - Current Assessment (NOV) | 108.0 | 108.4 | Medium |
10:00 | EUR | ECB's Coeure Speaks in London | - | - | Low |
13:00 | EUR | ECB's Weidmann Speaks in Madrid | - | - | Low |
14:30 | EUR | ECB Announces Covered-Bond Purchases | - | - | Medium |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EURUSD | 1.2059 | 1.2252 | 1.2322 | 1.2445 | 1.2515 | 1.2638 | 1.2831 |
GBPUSD | 1.5489 | 1.5577 | 1.5617 | 1.5665 | 1.5705 | 1.5753 | 1.5841 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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