Talking Points:

Australian Dollar Outperforms as Asian Stocks Recover from Post-FOMC Selloff
Japanese Yen May Rise as FTSE 100 Stock Futures Hint at Risk Aversion Ahead
Comments from Fed’s Kocherlakota May Drive Volatility into the End of the Week

The Australian Dollar outperformed in otherwise quiet overnight trade. The currency advanced alongside futures tracking Australia’s benchmark ASX/S&P 500 stock index, pointing to firming risk appetite as the catalyst behind the move. Asian shares corrected higher after a massive selloff yesterday that pushed the MSCI Asia Pacific regional composite equities gauge to yield its worst one-day drop since August. That move reflected a hawkish turn in Fed policy expectations in the wake of the FOMC policy meeting.

A quiet economic calendar in European trading hours hints the consolidative mode noted in Asia is likely to continue. FTSE 100 stock index futures are pointing lower ahead of the opening bell however, warning that risk aversion may yet emerge into the end of the trading week. Such an outcome is likely to bode ill for risk-geared FX including the Aussie and New Zealand Dollars while boosting safety-geared alternatives, notably the Japanese Yen.

Later in the day, the spotlight will turn to a round of scheduled commentary from a range of Federal Reserve policy officials. A speech from Minneapolis Fed President Narayana Kocherlakota is likely to take top billing. Mr Kocherlakota was the only member of the rate-setting FOMC committee to dissent from the Fed’s latest decision, saying the somewhat more ambiguous language in the central bank’s forward guidance framework “weakens the credibility of [it’s] commitment to return inflation to the 2 percent target [and] fosters policy uncertainty that hinders economic activity.”

New to FX? START HERE!

Asia Session

GMT

CCY

EVENT

ACT

EXP