The Asian session today was an eventful one amid renewed fears over the US-China trade war following the US President Trump’s overnight comments. Moderate risk-aversion persisted across the financial markets in Asia that helped the US dollar to recover some ground across its main competitors.
Among the Asia-pac currencies, the Aussie emerged the biggest loser, down nearly 0.70% below the 0.73 handle, in response to awful Australian Q3 GDP numbers. However, upbeat Chinese Caixin services PMI release offered some temporary respite to the bulls. The Kiwi tracked the losses in its OZ neighbor and headed back towards the 0.68 handle. Meanwhile, the USD/JPY pair bounced-off two-week lows and regained the 113 level amid a broad-based US dollar rebound and BoJ Deputy Governor Wakatabe”s dovish remarks.
On the commodities front, both crude benchmarks fell nearly -1.60% amid the risk-off action on the Asian equities while gold prices on Comex traded weaker near 1240 levels, as the focus remains on the Treasury yields and Fed’s beige book in the day ahead.
Main Topics in Asia
Australia Q3 GDP misses, comes in at 0.3%
Australia 10-year bond yield hits 13-month low
Trump threatens tariffs if can’t reach “real deal” with China – Reuters
Northern Irish DUP says will vote against May’s Brexit deal – Reuters
BoJ’s Wakatabe: BoJ will maintain massive stimulus to nudge up prices to 2% target
China’s CommMIn: China will push ahead with trade negotiations with US in 90 days
China Caixin/Markit Nov Services PMI jumps to 5-month high of 53.8, a big beat
Fitch affirms China at A+ Outlook Stable
UK Parliament does not need to pass a law to revoke Article 50 – Sky News
Asian stocks recoil from renewed market concerns, open red across the board
Key Focus Ahead
Markets brace for a busy Wednesday’s European calendar, with the ECB President Draghi’s speech, the main highlight. However, the second-tier final services PMI releases from the Euro area will also offer some incentives to the EUR, GBP traders ahead of the UK services PMI report due at 0930 GMT. Also, of note remains the Eurozone retail sales report that will drop in at 1000 GMT. In early Europe, the non-monetary policy meeting of the ECB will be held at 0800 GMT and the BOE FPC statement will be published at 0830 GMT.
In the NA session, the Bank of Canada (BOC) rate decision at 1500 GMT will remain the main highlight amid a lack of the first-tier reports from Canada and the US. However, not much reaction is expected on the BOC rate decision, as the Canadian central bank is expected to stand pat after last month’s 25bps rate hike. Later on, at 1900 GMT, the Fed Beige book will be released, which could offer some fresh insights on the Fed’s monetary policy path.
Besides, the following central bankers’ speeches will also remain in focus for further trading impetus.
0830 GMT: ECB President Draghi
1315 GMT: FOMC member Quarles
EUR/USD under pressure despite US yield curve inversion, has charted symmetrical triangle
On the daily chart, the currency pair has charted a symmetrical triangle with support at 1.1292 and resistance at 1.1415. A break below the support would open up downside towards the recent low of 1.1315.
GBP/USD struggling to hold 1.2700 ahead of fresh Brexit headlines
The economic calendar is a fairly light screening for the GBP, with November’s Markit Services PMI due at 09:30 GMT and forecast to clock in at 52.5, a mild uptick from the previous month’s 52.2.
The Bank of Canada Preview: No December rate hikes but three more hikes to go in 2019
The Bank of Canada is widely expected to keep the overnight target rate unchanged at 1.75% on monetary policy meeting on Wednesday, December 5.
ADP employment preview: job creation expected to remain healthy
American employers are thought to have maintained their strong recruitment in November with 195,000 new positions on the books at the payroll processing giant ADP.
Rupee to drop back to 72 by end-May 2019 – Reuters poll
According to the latest Reuters poll of 40 strategists, the Indian National Rupee (INR) is likely to stall its rebound and drop back to the 72 level against its American counterpart by end-May 2019 following the nation’s general elections.
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