The buying interest around the US dollar across its main competitors regained momentum in Asia on the final trading day of the week, as risk-aversion in the Asian equity markets put a fresh bid under the safe-haven, the greenback. As a result, most majors traded on the back foot while the Yen bucked the trend and advanced, limiting the upside in the USD/JPY near 114.10 level while dragging the Yen crosses sharply lower. The Kiwi was the weakest so far, followed by the Aussie after the Chinese inflation readings and RBA SoMP failed to impress. The Loonie dropped on headlines that the Keystone XL pipeline has been blocked by the Federal court while the Euro and the GBP weakened heading into key UK macro releases.
Among the commodities, Gold inched lower to test the 1220 level after the 2-year Treasury yields hit 10.5-year highs on hawkish FOMC outlook. Both crude benchmarks traded near multi-month lows, as the oil markets officially entered into a bear market.
Main Topics in Asia
US ambassador has expectations for Friday’s China talk – Reuters
UK will not agree anything that brings a hard Irish border
RBA’s SoMP: No strong case for a near-term rate change, inflation forecasts revised up a little
China’s CPI drops to 0.2% m/m in October, meets estimates
Economists see 25% chance of a no deal Brexit as clock ticks – Reuters poll
Mexican EcoMin Guajardo: US, Mexico, Canada Ministers to sign trade pact Nov. 30
Federal Court blocks Keystone XL pipeline, CAD drops
Key Focus Ahead
The EUR calendar also remains quite busy, with a fresh batch of economic releases from the UK likely to drive the sentiment in the session ahead. The UK sees the quarterly and monthly GDP figures at 0930 GMT alongside the releases of the trade balance, industrial and manufacturing production data. Soon after, the NIESR GDP estimate will be reported for the month of October. The speech by the ECB Governing Council member Benoit Coeure is scheduled at 1000 GMT.
In the NA session, a flurry of relevant macro news from the US docket are slated for release at 1330 GMT that includes the PPI and core PPI figures. FOMC member Quarles” speech will be also eyed in the early trades. At 1500 GMT, the US UoM preliminary consumer sentiment and wholesale inventories data will be published. In the mid-American session, the Bakers and Hughes oil rigs count data will be eyed for fresh insights on the oil-price direction.
EUR/USD: hawkish Fed pushes US-DE yield spread to new multi-decade highs
The EUR/USD fell to an eight-day low of 1.1341 in Asia and could drop to 1.13 by NY close, courtesy of widening yield differentials. The bears may further strengthen if the spot drops below the key support at 1.13 (August low and October low).
GBP/USD: Brexit still going nowhere, UK GDP in the barrel for Friday
Britain sees a hefty data dump at 09:30 GMT Friday morning, with Business Investment, Manufacturing Production, Industrial Production, Trade Balance (both EU and non-EU), and Services Index, but the key numbers for the week’s end will be the kingdom’s GDP reading.
UK Q3 GDP Preview: GDP set to triple the first quarter, but the £100K prize is offered to kick-start the economy
The third-quarter UK Gross Domestic Product (GDP) growth rate is expected to see the first quarter’s rate triple while rising 0.6% over the quarter, the Office for National Statistics is scheduled to report on Friday, November 9 at 9:30 GMT.