Aussie, NZ Dollars to Rise if US Data Trims Fed Taper Bets

The Australian and New Zealand Dollars are likely to rise if a moderation in US economic news flow weighs against bets on a near-term cutback in Fed stimulus.

Talking Points

US Dollar Sold Overnight Amid Correction After Hitting 13-Month High
Aussie, NZ Dollars May Rise if US Data Trims Fed QE Reduction Bets

The US Dollar came under broad-based selling pressure in overnight trade, sliding as much as 0.2 percent on average against its leading counterparts. A standout catalyst did not present itself, suggesting the move was more so reflective a correction driven by profit-taking after six days of consecutive gains that brought prices to the highest level in close to 13 months.

A lackluster economic calendar in European hours is likely to see traders looking ahead to a busy US data docket. May’s Durable Goods Orders and New Home Sales as well as June’s Consumer Confidence numbers are due to cross the wires. Signs of moderation are expected on all fronts: durables orders is expected to slow; consumer confidence is seen edging lower after setting a five-year high in May; and home sales are forecast to post the smallest increase in three months.

Given investors’ acute focus on Fed monetary policy in the aftermath of last week’s FOMC announcement, data outcomes may be viewed through the prism of timing the onset of stimulus reduction. With that in mind, soft results that push back on fears of a near-term cutback in the size of QE asset purchases could prove supportive for risk appetite, boosting the sentiment-geared Australian, Canadian and New Zealand Dollars against the greenback and Japanese Yen.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT

CCY

EVENT

ACT

EXP

23:50

JPY

Corporate Service Price (YoY) (MAY)

0.3%

0.0%

-0.3%

5:00

JPY

Small Business Confidence (JUN)

49.6

–

48.2

Euro Session:

GMT

CCY

EVENT

EXP

IMPACT