Talking Points:
Yen Gains as Fed Stays the Course on Rate Hike Despite 1Q Slowdown
New Zealand Dollar Sinks as RBNZ Opens the Door for Policy Easing
Euro Unlikely to Find Lasting Momentum in Eurozone Inflation Report
The Japanese Yen outperformed in overnight trade, adding as much as 0.5 percent. The move mirrored a sharp drop on Asian stock exchanges, pointing to haven flows as the driver propelling the safety-linked currency. The MSCI Asia Pacific regional benchmark equity index fell 0.5 percent in a move the news-wires attributed to the absence of overtly dovish rhetoric in the FOMC policy statement published earlier in the day.
The New Zealand Dollar tumbled, falling as much as 1.1 percent on average against its leading counterparts, after the RBNZ monetary policy announcement. The central bank signaled interest rate hikes were off the table and hinted it was considering lowering borrowing costs instead. The markets are pricing in at least one 25bps reduction in the baseline lending rate over the coming 12 months.
Looking ahead, the preliminary set of April’s Eurozone CPI figures are expected to show the year-on-year core inflation rate held at 0.6 percent, unchanged from the prior month. The result seems unlikely to meaningfully impact the Euro even in the event of a deviation from forecasts considering its limited impact on near-term ECB policy trends.The central bank appears essentially on auto-pilot as it proceeds with its €60 billion/month QE effort.
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Asia Session
European Session
Critical Levels
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Yen Gains as Fed Fuels Risk Aversion, NZ Dollar Drops on RBNZ
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