Yen Down on Risk Appetite Swell But Year-End Flows May Fuel Turn
Talking Points:
- Return of Year-Capital Flows May Reboot Pre-FOMC Price Action Trends
- Yen Down, Aussie and NZ Dollars Higher as Risk Appetite Swells Overnight
- See Economic Releases Directly on Your Charts with the DailyFX News App
The safe-haven Japanese Yen slumped while the sentiment-geared Australian and New Zealand Dollar advanced as risk appetite firmed overnight. The MSCI Asia Pacific regional benchmark stock index rose 1.1 percent in a move that appeared to reflect follow-on momentum from a sharp rally on Wall Street. S&P 500 futures are pointing firmly higher head of the opening bell in Europe, hinting at more of the same through the end of the trading week.
Seasonal factors complicate continued improvement in sentiment however. The markets went into this week’s top event risk – the FOMC monetary policy announcement – gripped by a year-end push to take profits on trades reflecting the dominant themes prevalent in 2014. While the outcome of the sit-down disrupted this process, liquidation may return as the dust settles and traders reconsider the implications of what the Fed delivered.
Swelling risk appetite – embodied by a relentless push upward by US share prices – and a firming US Dollar have been the defining features of the macro landscape in 2014. The resumption of profit-taking on these trades as the onset of 2015 approaches would imply another parallel downturn in the greenback and sentiment-geared assets.
Renewed USDJPY weakness seems to best embody both sides of another push in year-end capital flows. On one hand, risk aversion points to the unwinding of frequently Yen-funded carry trades. On the other, a market-wide reversal of Fed-inspired US Dollar buying is likely to put potent downward pressure on the pair considering its sensitivity to shifts in the expected yield differential.
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Asia Session
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
21:00 |
NZD |
ANZ Job Advertisements (MoM) (NOV) |
-0.1% |
- |
-0.3% |
21:45 |
NZD |
Net Migration s.a. (NOV) |
5010 |
- |
5240 |
0:00 |
NZD |
ANZ Activity Outlook (DEC) |
37.3 |
- |
41.7 |
0:00 |
NZD |
NBNZ Business Confidence (DEC) |
30.4 |
- |
31.5 |
0:05 |
GBP |
GfK Consumer Confidence Survey (DEC) |
-4 |
-1 |
-2 |
2:00 |
NZD |
Credit Card Spending (MoM) (NOV) |
0.3% |
- |
1.5% |
2:00 |
NZD |
Credit Card Spending (YoY) (NOV) |
5.2% |
- |
6.8% |
3:28 |
JPY |
BOJ Annual Rise in Monetary Base (¥) |
80T |
80T |
80T |
4:30 |
JPY |
All Industry Activity Index (MoM) (OCT) |
-0.1% |
0.0% |
1.4% |
5:00 |
JPY |
Coincident Index (OCT F) |
104.5 |
- |
110.2 |
5:00 |
JPY |
Leading Index (OCT F) |
109.9 |
- |
104 |
5:00 |
JPY |
Nationwide Dept Store Sales (YoY) (NOV) |
-1.0% |
- |
-2.2% |
5:00 |
JPY |
Tokyo Dept Store Sales (YoY) (NOV) |
0.3% |
- |
-0.1% |
6:30 |
JPY |
BOJ Policy Statement, Kuroda Press Conf |
- |
- |
- |
European Session
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
7:00 |
EUR |
German Producer Prices (MoM) (NOV) |
-0.2% |
-0.2% |
Low |
7:00 |
EUR |
German Producer Prices (YoY) (NOV) |
-1.1% |
-1.0% |
Low |
7:00 |
EUR |
German GfK Consumer Conf (JAN) |
8.8 |
8.7 |
Medium |
9:00 |
EUR |
Eurozone Current Account s.a (€) (OCT) |
- |
30.0B |
Low |
9:00 |
EUR |
Eurozone Current Account n.s.a. (€) (OCT) |
- |
31.0B |
Low |
9:30 |
GBP |
Public Sector Net Borrowing (£) (NOV) |
14.8B |
7.1B |
Low |
9:30 |
GBP |
PSNB ex Banking Groups (£) (NOV) |
15.1B |
7.7B |
Low |
9:30 |
GBP |
Public Finances (PSNCR) (£) (NOV) |
- |
-2.6B |
Low |
9:30 |
GBP |
Central Government NCR (£) (NOV) |
- |
-3.7B |
Low |
11:00 |
GBP |
CBI Reported Sales (DEC) |
30 |
27 |
Low |
Critical Levels
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
EURUSD |
1.2128 |
1.2215 |
1.2251 |
1.2302 |
1.2338 |
1.2389 |
1.2476 |
GBPUSD |
1.5376 |
1.5504 |
1.5587 |
1.5632 |
1.5715 |
1.5760 |
1.5888 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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