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Asia Recap: Kiwi the weakest ahead of US NFP

FXStreet (Bali) - As is usually the case ahead of a 1st tier risk event (US NFP), the G10 FX space saw limited moves, with Asian currencies a touch softer, especially NZD, after tripping some stops below 0.7670 late in the session.

After the outright sales seen on Thursday, EUR/USD entered a period of consolidation along 1.2380-90. GBP/USD failed to garner any corrective interest, depressed at 1.5825/30. AUD/USD was bracketed between 0.8550-70, with the downside being exposed ahead of Europe. NZD/USD broke through 0.7770, area where some stops were taken out.

Fundamentally, Australia's AiG Performance of Construction Index fell from previous 59.1 to 53.4 in October, signaling a moderation in the industry’s rate of growth. The RBA’s quarterly Statement on Monetary Policy (SoMP) was a non-event, reiterating that the most prudent course is a period of rates stability. The RBA kept growth forecasts unchanged, upgraded inflation forecast to reflect lower A$, while also noting that A$ still above estimates of fundamental value, further fall would help rebalance economy.

In the US, Cleveland Fed President Loretta Mester, speaking to the Money Marketeers of New York University on “Federal Reserve Communications and Forward Guidance”, said that an increase in rates could be delayed if economy disappoints. Mester also said, headlines via Bloomberg, that she expects interest rates to rise some time in 2015, is not too concerned by low but stable inflation, and that if the Federal Reserve raises rates too late, would potentially have to hike faster. Lastly, the policy-maker expects 2% inflation by end of 2016, 5.5 pct unemployment by end of 2015

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