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TALKING POINTS – NZ DOLLAR, JAPANESE YEN, US RETAIL SALES

  • NZ Dollar down despite supportive comments from RBNZ’s Orr
  • Japanese Yen[1] up as scandals threaten PM Abe’s economic policy
  • US Dollar[2] may face pressure if retail sales statistics disappoint

The New Zealand Dollar[3]narrowly underperformed in otherwise quiet Asia Pacific trade. The selloff appeared to echo an upward gap in US Treasury bond yields at the weekly trading open as markets shrugged off weekend geopolitical jitters[4]. Firming risk appetite corresponds to a world view wherein the Fed has scope for further rate hikes, pushing the Kiwi off its perch as the highest-yielding of the G10 FX majors.

Seemingly supportive comments from newly-installed RBNZ Governor Adrian Orr did not offer a reprieve. He told NewstalkZB radio over the weekend that that the central bank’s forthcoming pivot to a dual-mandate policy framework will not divert its attention away from price stability. Orr added that the economy is “near full employment”, which might have been interpreted as boosting near-term tightening chances.

The Japanese Yen traded higher after a Nippon TV poll released on Sunday gave Prime Minister Shinzo Abe an approval rating of just 26.7 percent, the lowest on record. This compounded the sense that his economic program – including hallmark support for ultra-loose BOJ monetary policy – might be in jeopardy. Thousands of protesters gathered outside Parliament to call for Abe to resign over the weekend after recent scandals.

Looking ahead, a tame offering on the European data docket may see investors looking ahead to US retail sales figures due later in the day. They are expected to

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