FOREX: Yen Outperforms in Thin Liquidity, NZ Dollar Gains Despite GDP Drop

Key Overnight Developments

• Yen Outperforms in Thin Liquidity as Japanese Markets Close for Holiday
• NZ Dollar Gains Despite Dismal GDP Result as Risk Appetite Swells in Asia

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.3066	1.3169
GBPUSD	1.5352	1.5489

The Euro was little changed in overnight trade, oscillating in a narrow range near 1.31 to the US Dollar. The British Pound edged higher, adding 0.2 percent against the greenback. We remain short EURUSD and long USDJPY.

Asia Session Highlights

CCY	GMT	EVENT	ACT	EXP	PREV
NZD	21:45	Gross Domestic Product (QoQ) (3Q)	-0.2%	0.1%	0.1% (R-)
NZD	21:45	Gross Domestic Product (YoY) (3Q)	1.5%	1.8%	1.8% (R-)

The Japanese Yen outperformed, adding 0.5 percent against the US Dollar and 0.4 percent on average versus its top counterparts. A clear-cut catalyst behind the advance was not readily apparent, with the scope of what would otherwise have amounted to normal intraday volatility likely amplified by low liquidity conditions as Japanese markets closed for the Emperor’s Birthday holiday.

The New Zealand Dollar dipped downward – touching as low as 0.7383 against its US counterpart – after third-quarter Gross Domestic Product figures showed the economy unexpectedly shrank 0.2 percent from the three months through June. Losses were short-lived however as stocks pushed higher for the third day in Asian trade, following the advance on Wall Street driven by an upward revision to US economic growth figures (albeit a smaller one than expected), boosting the risk-linked currency.

Euro Session: What to Expect

CCY	GMT	EVENT	EXP	PREV	IMPACT
EUR	7:45	French Consumer Spending (MoM) (NOV)	0.9%	-0.7%	Low
EUR	7:45	French Consumer Spending (YoY) (NOV)	-0.4%	-0.3%	Low
EUR	7:45	French Producer Prices (MoM) (NOV)	0.4%	0.8%	Low
EUR	7:45	French Producer Prices (YoY) (NOV)	4.4%	4.3%	Low
GBP	9:30	Index of Services (3M) (OCT)	0.8%	0.6%	Low
GBP	9:30	Index of Services (MoM) (OCT)	0.4%	0.6%	Low
GBP	9:30	BBA Loans for House Purchase (NOV)	30250	30766	Low

The economic calendar looks uneventful in European hours, opening the door for broad trends in sentiment to hold sway over currency market price action. The path of least resistance looks clouded however, with stock index futures showing mixed signals ahead of the opening bell. On balance, US economic data is likely to set the tone once again, with a hefty dollop of releases on tap in the afternoon as November’s Durable Goods Orders, Personal Income and Spending and New Home Sales reports as well as weekly Jobless Claims figures cross the wires.