The risk-off sentiment was the key underlying theme in Asia this Tuesday, as global growth concerns continued to remain a drag on the markets. The safe-havens such as the Yen was offered a fresh boost at the expense of the higher-yielding currencies such as the Aussie, the Kiwi and the GBP. The Aussie emerged the main laggard while the USD/JPY pair breached the 109.50 level. The Cable faced rejection multiple times just ahead of the 1.29 handle.
Among the related markets, both crude benchmarks extended the corrective slide as economic worries spread while gold prices failed to benefit from negative Asian equities and traded weaker below 1280 levels.
Main Topics in Asia
US President Trump: China’s latest economic numbers show need for trade deal – Twitter
UK Labor Party proposes option of second Brexit referendum
German Govt Spox: Germany continues to campaign for an orderly Brexit
UN sees global economic growth slowing to 3% in 2019 – Reuters
Japanese firms to keep capex steady amid US-China trade tensions – Reuters Corporate Survey
WTI consolidates the upside near $54, OPEC cuts underpin
UK’s Rudd: UK may face resignations if lawmakers stopped from voting away no-deal – The Times
Japan’s 40-year bond yield hits lowest since December 2016
Gold remains on defensive despite IMF’s downward revision of global growth
China’s State planner: economic pressure will hit the job market
India’s GDP will improve to 7.5 percent next fiscal – IMF
Key Focus Ahead
Markets gear up for a busy EUR macro calendar, with the UK jobs and wages data to headline. The wages, both excluding and including bonuses, for November are likely to remain unchanged at 3.3% 3m/y while the ILO unemployment rate is also seen steadying at 4.1% in the reported month. Also, in focus remains the German ZEW economic survey for the month of January, with the headline figure seen arriving at -18.4 vs. -17.5.
Later in the NA session, the Canadian manufacturing sales and wholesale sales will be released at 1330 GMT, followed by the US existing home sales data at 1500 GMT. In early late NY/ early Asian trades at 2245 GMT, New Zealand’s Q4 2018 CPI report will be published.
EUR/USD: yield differentials favor the US dollar
The EUR, therefore, is likely to remain under pressure ahead of the ECB’s rate decision. The technicals are also biased bearish. For instance, the pair has found acceptance under the 50-day moving average (MA) support and the 5- and 10-day MAs are trending south.
GBP/USD slipping further away from 1.2900 ahead of UK wages
The GBP/USD pair broke its overnight consolidative mode to the downside heading into the London markets, now looking to test the 100-DMA at 1.2854, with the immediate focus now on the UK labor market report due at 0930 GMT.
UK wages Preview: UK wages set to rise supporting rate hike outlook
Even with the Brexit uncertainty weighing on the UK business investment and consumer spending, the UK labor market is solid and firm and the fresh labor market report for December due Tuesday, January 22 is expected to confirm it again.
NZ: Recent volatility in fuel prices to have little bearing on Q4 CPI – Westpac
Analysts at Westpac present a brief preview of New Zealand’s Q4 2018 CPI report due later on Tuesday at 2145 GMT.
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