Article Highlights

  • Japanese PPI down 2.1% y/y in April as expected, +0.7% previous
  • Japan’s consumer confidence index down from 41.7 to 41.5 vs. 41.9 forecast
  • BOJ Governor Kuroda reiterated that 2% inflation target will be reached in 2016
  • Fonterra downgraded volume forecasts for whole milk powder
  • Swiss PPI and U.K. construction output data coming up
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After yesterday’s stellar climb, the Fonterra announcement brought the Kiwi crashing back down against its forex rivals. According to the dairy producer, which also happens to be one of New Zealand’s largest companies, they are expecting lower volumes in whole milk powder for the next twelve months. Now that’s a huge blow to the economy, which relies heavily on its dairy production and exports.

NZD/USD is lower by 30 pips (-0.38%) and is trading below the .7500 mark once more, NZD/JPY is down 11 pips (-0.11%), and EUR/NZD is up 25 pips (-0.17%). Even the Australian dollar got dragged lower by this downbeat report, with AUD/USD facing a 20-pip loss (-0.29%) and AUD/JPY dropping to the 96.00 handle (-0.11%).

Japan had its fair share of bleak economic figures, as the latest set of reports indicated a 2.1% annualized decline in producer prices and increased pessimism among consumers. Nonetheless, BOJ Governor Kuroda has reiterated in today’s testimony that the central bank no longer needs to expand its stimulus program and that the economy can be able to reach its 2% inflation target by the first half of 2016. Told ya he’s a glass half-full kinda guy!

The forex calendar shows that there are only a couple of low-tier reports lined up for today’s London session, namely the Swiss PPI and the U.K. construction output report. Switzerland already printed a dismal CPI reading so it shouldn’t be much of a surprise if producer prices show the estimated 0.1% decline or an even larger drop. U.K. construction output could show a 4.1% jump and possibly give the pound more fuel in its ongoing rally.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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