Forex today was mainly driven by broad-based risk-aversion, triggered by the overnight comments from the US President Trump, suggesting that Japan is the next line of fire amidst ongoing US-Sino trade row. Safe-havens such as US dollar, the Yen and gold were boosted at the expense of the higher-yielding/ risk assets such as the Antipodeans, Asian equities, copper and oil prices.
The Aussie was the worst hit by risk-aversion, knocked-off almost near 2018 lows of 0.7143. Meanwhile, the USD/JPY pair tumbled to 110.40 before recovering to 110.60 towards Asia closing. The Canadian dollar also picked up some strength on Trump’s upbeat remarks on the NAFTA deal, having dragged USD/CAD down to 1.3115 level.
Main topics in Asia
Trump possibly turning an eye towards Japan – WSJ
As reported by the Wall Street Journal, US President Donald Trump may be gearing up to get into another trade row amidst a deepening trade war with China, this time with Japan, as noted by a reporter for the WSJ who received a phone call from the US president.
Fed Evans: Fed likely to push rates beyond ‘neutral’ – Reuters
According to Reuters, Chicago Federal Reserve head Charles Evans, one of the more hawkish Fed presidents, suggested that the US will likely have to lift rates above the neutral rate to keep inflation in check.
China threatens UK trade talks on warship sail-by – Reuters
As reported by Reuters, China’s state-run media outlets are taking warning shots at the United Kingdom regarding trade talks after a British warship made a sail-by in contested waters in the South China Sea.
Canada Official: It’s unlikely a Nafta deal to be agreed to this week
Bloomberg quoted a Canadian government official, as saying that a North Atlantic Free Trade Agreement (NAFTA) deal is unlikely to be reached to this week.
Trump: ‘We’re in a little bit of a skirmish with China, but doing well’
While addressing a rally in Billings, Montana last minutes, the US President Donald Trump noted that “we’re in a little bit of a skirmish with China, but doing well”.
Trump says believe Canada will be a part of the NAFTA – Source
An unnamed source out of Washington cites that the US President Trump said that he believes Canada will be a part of the North Atlantic Free Trade Agreement (NAFTA).
Source: Japan ministries seek record $930 billion budget for fiscal 2019 – Reuters
Reuters cited a Japanese government official with the direct knowledge of the matter, noting that the budget requests from Japan’s government offices have hit a record $930 billion for the next fiscal year starting in April.
Japan’s Aso: No comment regarding Trump remarks on US-Japan trade
Japanese Finance Minister Taro Aso is on the wires now, via Reuters, declining to comments on Trump’s overnight remarks that probably sparked US-Japan row.
Gold Technical Analysis: Hourly MAs adopting bull bias, focus on dollar index
The bullish crossover between the 50-hour and 100-hour moving averages (MAs) adds credence to higher highs charted by gold from the Sep. 4 low of $1,189 and the upside break of the falling trendline.
Key Focus ahead
We are heading into a busy calendar that will wrap up a fairly eventful week. Ahead of the EU open, the German industrial production and trade figures will be closely eyed after June’s awful readings. Both the German data will be reported at 0600 GMT. In Europe, the final GDP numbers from the Euroland will headline amid a couple of second-liner UK macro updates. The UK sees the Halifax house prices and consumer inflation expectations gauge at 0730 GMT and 0830 GMT respectively.
Moving on, the NA session offers the key US payrolls and earnings data which will emerge as the main event risk for today. Also, in focus will be the Canadian jobs report amid the NAFTA talks deadline. Oil traders will await the Bakers and Hughes US oil rig count data for fresh impetus on oil prices.
EUR/USD: Trade tensions could keep gains under check ahead of US NFP release
A big beat on the wage growth figure would reinforce hawkish Fed expectations, driving the US dollar higher across the board. The Eurozone second-quarter GDP, due for release at 09:00 GMT, could also move the EUR pairs.
GBP/USD on pause just above 1.29 ahead of Friday’s US NFP
The GBP/USD is heading into a dense Friday trading tightly just above the 1.2900 handle, and Sterling traders will be bracing for a London market session that will be seeing potential knock-on volatility from a top-tier GDP reading for the European Union.
Nonfarm Payrolls preview: too much trouble somewhere else
The US Nonfarm Payrolls report will be out this Friday, as usual, at 12.30 GMT. The government jobs’ report is expected to show that the US economy added 191,000 new jobs in August.
How to trade the US Non-Farm Payrolls with EUR/USD
The US NFP is one of the most market-moving events, and wages remain in the limelight. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
Canadian jobs preview: Key point for CAD at a sensitive timing
Canada publishes the labor market report for August on September 7th, at 12:30 GMT. The level of employment is a major market mover everywhere, and also in Canada, it has a significant effect on the value of the Canadian Dollar.
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