Forex Flash: G10 weaker on positive US retail numbers - OCBC Bank

Emmanuel Ng of OCBC Bank notes that G10 currencies were down yesterday following better than expected US Retail numbers, which boosted sentiment towards the greenback.

Meanwhile however, he notes that the Euro was also on a relatively more vulnerable footing in view of the weaker than expected response to an Italian debt auction (higher yields) and disappointing Eurozone industrial production data. He writes, “Late Wednesday, the NZD/USD was chopped lower after the RBNZ kept its benchmark interest rate on hold at 2.50% as expected with the central bank highlighting an uneven recovery, an overvalued currency, and giving no indication that it was actively considering tighter monetary policy (i.e., the policy tilt may have gone neutral from mildly hawkish previously). After the NZD’s sell off, RBNZ governor Wheeler interjected by noting that the selling pressure after the statement “was a good thing” and that the NZD is perceived as being overvalued by 10-15%.”

However, he continues to note that although the current mood remains one of dollar business, JPY may also be awaiting the imminent confirmation of the BoJ governorship nominees expected this week. For the EUR, Ng feels that results from a scheduled Spanish debt auction may provide further distraction for the EUR today while tomorrow, Portugal is also due to announce results of the review by the troika of creditors under its bailout program.