The sentiment across the financial markets in Wednesday’s Asian trading was lifted by increased hopes of a US-China trade deal, as the delegates from both the countries wrapped up trade talks while the recent rally in oil prices further boosted the risk-on trades. As a result, the Asian stocks climbed to 3.5-week highs and the commodity-linked currencies saw solid gains.
The Kiwi emerged the strongest, followed by the Loonie and Aussie, as the gains in the Aussie dollar were capped by a sharp drop in the Australian building permits data. Meanwhile, the USD/JPY pair traded firmer but remained capped by the 109 barrier amid increased nervousness heading into the FOMC December meeting minutes release. Both the EUR and the pound benefited from a broadly weaker US dollar. The Trump’s address to the nation on border security turned out to be a non-event, having little impact on the greenback.
On the commodities front, gold futures on Comex traded on the defensive near 1284 levels while both crude benchmarks rallied nearly 1.50%, with WTI having cracked the key 50 mark. Copper prices on Comex also jumped to 2.67 level, up +0.80% so far.
Main Topics in Asia
World Bank warns of growth slowdown through 2019 – Reuters
Australia: Dwelling approvals moved sharply lower in November – Westpac
Japan real wages hit 5-month high in November – Reuters
Gold Technical Analysis: Deeper pullback likely below 55-period EMA on 4H
NDRC: China to introduce policies to strengthen domestic consumption – Xinhua
US President Trump: Barrier `absolutely critical’ to border security
US House Speaker Pelosi: Trump has `chosen fear’ over shutdown impasse
Oil continues to climb on trade hopes, WTI clears $50.00
China said to plan a higher fiscal deficit target of 2.8% for 2019 – Reuters
Asian stocks in the green as trade hopes bolster Pacific sector
Key Focus Ahead
The EUR macro calendar remains relatively quiet today, in absence of first-tier economic releases. Hence, the focus remains on the German trade figures due to be reported at 0700 GMT. The Swiss CPI report will drop in at 0730 GMT, followed by the Eurozone jobless rate that will be reported at 1000 GMT. The UK docket remains empty, but the Brexit-related headlines will continue to drive the sentiment around the GBP markets.
In contrast, the NA session remains eventful, with the key central bank action headlining amid second-tier macro updates. The focus remains on the Bank of Canada (BOC) rate decision (1500 GMT) and Governor Poloz’s speech at the post-policy presser at 1515 GMT.
We have the speech by the Bank of England (BOE) Governor Carney at 1530 GMT. Carney is due to participate in an online question and answer session about the future of money at the Bank of England’s Future Forum. At the same time, the official US government weekly fuel stocks data will be reported by the EIA.
However, the main event risk for today remains the December FOMC meeting minutes release that will offer fresh cues on the Fed’s 2019 rate hike outlook, prompting fresh US dollar trades.
EUR/USD: Focus on Fed minutes
The EUR/USD pair could scale the crucial 100-day MA hurdle on the back of the dovish Fed minutes, having reported moderate gains in Asia, possibly tracking the uptick in the Asian equities.
GBP/USD getting tied up near 1.2750 ahead of BoE Carney, US FOMC double-feature
The economic calendar delivers a pairing of central bank action for the Cable today, but not until much later in the day, with a speech from the Bank of England’s (BoE) Mark Carney at 15:30 GMT “¦
The Bank of Canada Preview: Lower oil prices and headline inflation will keep rates on hold in January
Even with the policy rates unchanged in January, the Bank of Canada Governor Stephen Poloz is expected to remain on track for further rate hike voicing the data dependent policy approach.
FOMC Minutes Preview: The risks behind the pause
The explanations for the change in the Fed’s economic and rate outlook was not contained in the FOMC statement at the December meeting.
US President Trump to meet with Congressional leaders on Wednesday at 2000 GMT
Reuters reports that the US President Trump will meet with Congressional leaders on Wednesday at 3 PM Washington Time (2000 GMT).
Indian rupee could take another beating in 2019 – Reuters poll
Indian rupee (INR) could take a beating in 2019, courtesy of the uncertainty surrounding the national elections, scheduled in May and due to an expected economic slowdown, a Reuters poll found.
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