The US dollar attempted a minor bounce across its main competitors in Friday’s Asian trading, as the appetite for risk assets was dented by dismal Chinese inflation figures and a lack of progress on the US-China trade front. Most majors traded on the back foot, with the Aussie having emerged the main laggard. The AUD/USD pair kept losses below the 0.71 handle, despite some upbeat remarks on the exchange rate level from the RBA Assistant Governor Kent. The Kiwi also tracked the Aussie lower and almost tested the 0.6800 support. The USD/JPY pair extended its overnight bearish momentum and hit fresh three-day lows at 110.27 levels, as the Yen regained ground amid sizeable losses in the Asian indices. The Japanese benchmark, the Nikkei 225 index, dropped nearly 1.50% to near 20,840 levels while the Chinese equity markets also declined -0.50% to -1.75%.
Despite the risk-off market profile, both crude benchmarks advanced amid deepening OPEC output cuts. Brent hit fresh 2019 highs above USD 65 while WTI tested USD 55 mark. Meanwhile, gold prices on Comex traded better bid near 1315 region, as the bulls consolidated the latest recovery ahead of the key US macro releases.
Main Topics in Asia
RBA’s Kent: Recent fall in AUD “helpful at the margin” given spare capacity in economy, low inflation
Brexit: UK is backing down on demands to change the deal – Bloomberg
China economic rebound to drive USDCNY lower to 6.55 by end-2019 – Morgan Stanley
China’s CPI declines to 1.7% y/y in January, misses estimates
Fed now seen raising rates once in 2019 – Reuters poll
USD/CNH Technical Analysis: 6.8085 is the level to beat for the bulls
Brent oil hits 2019 high above $65
Trump to sign bill to avert government shutdown – White House Official
USD/INR Technical Analysis: Trapped between key MAs, bullish above 71.82
Little progress in US China trade talks, but ‘scrambling to produce an agreement’ – FT
Key Focus Ahead
Markets gear up for a busy day ahead, with the EUR calendar to showcase the UK retail sales report for January at 0930 GMT. The consumer spending in the UK economy is expected to have increased last month by 0.2% m/m and 3.4% y/y. Next, of relevance for the EUR, GBP traders remains the Eurozone trade balance for December slated for release at 1000 GMT.
In the NA session, the Canadian foreign securities purchases data will be eyed at 1330 GMT among other minority reports from the US. Meanwhile, the key risk events remain the US industrial production data that will drop in at 1415 GMT, soon followed by the University of Michigan (UoM) consumer sentiment gauge at 1500 GMT. The focus will also remain on the weekly US rigs count data due to be published by Baker Hughes oilfield services company (due at 1800 GMT).
Besides, the speeches from the global central bankers are scheduled as follows:
1300 GMT: ECB Governing Council member Coeure
1455 GMT: FOMC member Bostic
EUR/USD: Investors add bearish bets despite weak US data, tighter German-US yield spreads
Put simply, market sentiment is bearish on EUR/USD and hence, a bounce, if any, could be short-lived. Validating that argument is the last week’s bearish close below the 200-week MA.
GBP/USD: All eyes on UK retail sales
January month UK retail sales will become an important reading for the GBP traders. Other than the retail trade report, developments relating to Brexit as well as the US-China trade discussions going on Beijing could also direct near-term trade sentiment of the GBP/USD pair.
UK retail sales Preview: Bargains help retail sales to recover after the worst December in a decade
Total UK retail sales are expected to rise 0.1% over the month in January following -0.9% monthly slump in sales in the previous month.
Michigan Consumer Sentiment Index Preview: The tale of the shutdown
The University of Michigan consumer sentiment index is predicted to rise to 93.0 from 91.2 in January. The current conditions index is expected to move up to 112.1 in February from 108.8.
Trump to deliver remarks on border at 1500 GMT on Friday
According to Reuters, the US President Trump is set to deliver remarks on the border at 10 am (1500 GMT) on Friday.
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