ASIA SUMMARY

Asia started the session with some wild NZD/USD moves as the Reserve Bank of New Zealand raised interest rates by 25 basis points. Market expectations were for no hike but some were still expecting 50% chance of a rise. We saw Kiwi jump up towards .7500 area but found sellers after the accompanying statement warned of intervention and declared that the exchange rate is “exceptional by historical standards”. We saw weak longs head for the exits off this jawboning and the pair sold down to the .7420 area. The action later in the session was very choppy with a few more back and forth moves before settling down.

In other currency pairs we saw consolidation as the dollar selling trend remains intact. EUR/USD steadily grinded higher as it remains poised for another test of all-time highs. USD/JPY continues to find resistance as it appears sellers have come down from 119 to the 118.80 area. EUR/JPY which is finding resistance around 162, was also in a holding pattern.

With Golden Week next week and Japanese Consumer Price Index (CPI), employment data and the Bank of Japan interest rate decision, expect some volatility tomorrow during the Asia session. No rate hike is expected but the CPI could provide clues to the timing of the next BOJ move.

Upcoming Data Release (UK Session):

Germany: (2am EDT) Month over month import price index expected .5% vs. previous .5%. (2:10am EDT) GfK Consumer Confidence Survey expected 4.7 vs. previous 4.4.

UK: (2am EDT) Month over month nationwide house prices expected .6% vs. previous .5%.