Moderate risk-aversion was the underlying theme in Asia this Tuesday, as markets digest the aftermath of all the UK indicative votes rejection once again while Treasury yields returned to the red and dragged the US equity futures lower alongside. As a result, the USD/JPY pair remained trapped in a narrow range below the 111.50 level but the buyers managed to find some support from broad-based US dollar strength.
The Antipodeans tumbled amid souring risk appetite, with the Aussie further hit by RBA’s lowering of the inflation expectations in its monetary policy statement. The Kiwi fell sharply to near 0.6770 levels amid a retreat in oil prices. Both crude benchmarks reached fresh five-month tops, with WTI having briefly regained the 62 handle amid potential additional US sanctions on Iran. Meanwhile, gold prices on Comex stalled its overnight sell-off and reversed to the 1290 mark, offering some respite to the EUR bulls. The EUR/USD pair hit fresh monthly highs near 1.1195 amid poor Eurozone fundamentals while the Cable collapsed on Brexit stalemate.
Main Topics in Asia
UK parliament effectively votes “no solution” – all indicative proposals fail
UK Finance Minister Hammond: Tories may have to consider referendum since neither part
Brexit – UK Sun reports a final round of indicative voting on PM May’s deal expected Thursday
A clear warning that the ongoing impasse at Westminster is contributing to a sharp slowdown – BCC
Japan’s Motegi: First round of trade talks with US scheduled for April
China Press: Low chance of PBOC rate cuts this year
WTI rises to fresh 5-month high on speculations of the US sanctions on Iran
Officials: EU-US trade talks face delay, risk Trump backlash – Bloomberg
Australia budget: Government likely to announce tax cuts
South Korea to add more government stimulus to economy in April – Yonhap
Reserve Bank of Australia steers rate on steady course, Aussie pops and drops
Key Focus Ahead
Next of relevance for markets remain the Swiss CPI report due at 0630 GMT, followed by the UK March construction PMI release at 0830 GMT and Eurozone PPI data that will drop in at 0930 GMT.
The main event risk for today remains the US durable goods data slated for release at 1230 GMT. Also, of note remains the New Zealand GDT price index due around 1400 GMT and the US API weekly crude stocks data that will be reported later in the NA session at 2030 GMT.
EUR/USD risks falling to fresh 21-month lows on US-Eurozone macro data divergence
The recent low of 1.1176 could be put to test in Europe on growing macro data divergence. A deeper drop may be seen if the US durable goods orders figure for February blows past expectations.
GBP/USD: Heavy around 1.3070, eyes on Brexit news, UK PMI
The monthly release of the UK Markit construction purchasing managers’ index (PMI) will be up at 08:30 GMT. The sentiment gauge is likely to increase to 49.8 from 49.2 but may still remain under the 50 mark that bifurcates industry expansion from the otherwise case.
Gold Technical Analysis: Pennant breakdown on 1H chart favors re-test of recent lows near $1,280
Gold is trading on the defensive at $1,287 and could drop to $1,281 (March low) in the next day or two, as the path of least resistance is to the downside, according to the pennant breakdown seen in the hourly chart.
US Durable Goods Preview: Following retail lower?
New orders for durable goods are predicted to fall 1.8% in February following January’s revised 0.3% increase. Orders outside of the transportation sector are expected to rise 0.2% following January’s adjusted 0.2% drop.
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