Talking Points

Aussie, NZ Dollars Correct Lower After Yesterday’s Strong Showing
British Pound May Rise as Jobless Claims Drop Boosts BOE Outlook
S&P 500 Futures Hint Sentiment-Linked Assets May Correct Lower

The Australian and New Zealand Dollars underperformed in otherwise quiet overnight night, sliding as much as 0.3 and 0.4 percent respectively against their major counterparts. The move likely reflected corrective price action following the two currencies’ standout performance amid a swell in risk appetite yesterday. That advance seemed to follow easing worries about a Western military intervention in Syria.

Augusts’ UK Jobless Claims report headlines the calendar in European hours. Expectations call for 21,000 decline following drops of more than 29,000 in June and July. Such formidable draw-downs may see the unemployment rate slip below the BOE’s 7 percent threshold sooner than policymakers expected, prompting a premature unwinding of the bank’s stimulus efforts. Needless to say, a strong print that is seen as increasing the probability of such an outcome is likely to prove supportive for the British Pound (and vice versa).

On the sentiment front, a cautious downturn on S&P 500 futures warns risk appetite may deflate somewhat after yesterday’s big-splash improvement. This US economic calendar is relatively uneventful, leaving the markets in digestion mode after recent volatility. The absence of top-tier economic news likewise makes for a greater sensitivity to headline risk however, with news-flow out of Syria particularly of note.

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