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Talking Points:

• Yen gains as stocks fall, Aussie & NZ Dollars rise on fading rate cut bets

• Upbeat Eurozone PMIs unlikely to help Euro but may boost risk appetite

• Hawkish Fed-speak may cap risk-on momentum, send US Dollar upward

The Japanese Yen traded higher in overnight trade as Asian stocks declined, boosting support for the anti-risk currency. Interestingly, the risk-off mood did not extend to the typically sentiment-sensitive Australian and New Zealand Dollars. Both currencies edged upward alongside front-end bond yields, hinting at ebbing RBA and RBNZ rate cut speculation as the catalyst for gains.

The preliminary set of May’s Eurozone PMI figures headlines the economic calendar in European trading hours. The regional composite gauge is expected to rise to 53.2, implying the pace of manufacturing- and services-sector activity growth accelerated to the highest in four months. News-flow from the single currency area has increasingly improved relative to forecasts since early March, opening the door for an upside surprise.

Firm PMI outcomes are unlikely to mean much for the Euro in as much as they are unlikely to alter the ECB’s overtly dovish posture. The prospect of improving growth dynamics in what is collectively the world’s largest economy may boost risk appetite however, especially considering recent worries about broadly sluggish global performance. That may cap Yen gains but offer continued support to commodity-bloc FX.

Fed-speak comes back into the spotlight later in the day, with comments from James Bullard and John Williams – Presidents of the Fed’s St. Louis and San Francisco branches, respectively – due to cross the wires. Williams has already established himself as relatively hawkish vis-à-vis an interest rate hike in June or July last week. Bullard’s posture in recent months suggests he is likely to follow suit. This may cap any risk-on momentum while boosting the US Dollar.

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Asia Session

European Session