The latest FT report about significant progress on the US-China trade talks boosted the risk-on sentiment across the financial markets in Asia this Wednesday. Further, upbeat Australian retail sales and trade figures combined with a stellar Chinese services PMI report bolstered the demand for the risk assets such as the Asian equities, oil and Treasury yields. Amongst the G10 currencies, the Aussie benefited the most and regained the 0.71 handle. The Kiwi followed suit and headed back towards the 0.68 handle amid rallying oil prices that drove the Loonie higher alongside, with USD/CAD now inching closer towards the 1.3300 level.
Meanwhile, the USD/JPY briefly regained the 200-DMA barrier and hit fresh 2-week tops at 111.53 before easing back to 111.40 levels, a lack of demand for the safe-haven US dollar kept a check on further upside. Both the European currencies, the EUR and the GBP staged a tepid comeback amid fresh optimism on the Brexit issue, as markets hoped for faster progress on the UK‘s exit from the EU. Gold prices on Comex returned to the green zone and looked to test the 1300 level, despite better risk environment.
Main Topics in Asia
Aussie retail sales and trade balance: Retail sales was a big surprise to the upside (AUD up)
US and China draw closer to final trade agreement – Financial Times
New Zealand’s Finance Minister: Global slowdown is a risk to New Zeland’s economy
Asian Development Bank trims emerging Asia 2019 growth forecasts
Gold seesaws near $1292 amid mixed market sentiment
China’s Caixin services PMI jumps to 54.4 in March, a big beat (Aussie regains 0.71)
BOJ’s Wakatabe: Inflation has been subdued globally
GBP: The “biggest opportunity” among DM currencies as Brexit impasse nears end – Goldman Sachs
China’s Foreign Minister Wang: China has no intention to split, weaken the EU
WSJ: Trump called Powell in March as stocks slid amid growth worries – Bloomberg
Oil price hits five-month in Asia despite the US inventory buildup
Key Focus Ahead
We have a busy EUR macro calendar ahead, as a series of final services PMI reports from across the Euro area will start trickling from 0715 GMT onwards. At 0830 GMT, the UK services PMI release will be closely eyed and is expected to drop to 50.9 in March vs. 51.3 last. Soon after, the Eurozone retail sales data will be reported at 0900 GMT. Further on, ahead of the US open, the US ADP employment change numbers will be published at 1215 GMT. This report is usually considered as a precursor to the key payrolls data due this Friday at 1230 GMT.
In the NA session, the US Markit services PMI data will be released at 1345 GMT, followed by the ISM non-manufacturing PMI report due at 1400 GMT. The numbers are seen lower at 58.0 vs. 59.7 last. Next of relevance remains the US EIA crude inventories report slated for release at 1430 GMT.
Apart from the macro news, the speeches by the FOMC members Bostic and Kashkari will remain in focus for fresh hints on the Fed’s interest rates outlook.
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GBP/USD recovers on Brexit optimism/risk-on, all eyes on UK services PMI
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