Forex today experienced a typical caution trading heading into the Super Wednesday, with most majors sticking to tight trading ranges amid a minor USD bounce and negative Asian equities. The risk-off sentiment extended into Asia, as markets weighed in escalating US-EU trade worries and Brexit uncertainty. The safe-haven Yen traded on the front foot, keeping the USD/JPY pair largely subdued ahead of the 111 handle. Meanwhile, the traditional safe-haven gold treaded water near the 1300 mark, in search of fresh direction.
The AUD/USD pair was a big mover this session, having tested the 0.71 handle before bouncing back sharply to near 0.7150 region on upbeat comments from RBA Deputy Governor Debelle. The Kiwi tracked the renewed uptick in the Aussie and regained the 0.6750 barrier while stabilizing oil prices also underpinned. Among the European currencies, the Cable bounced to 1.3070 levels, but lacked follow-through while the EUR/USD pair consolidates above mid-1.12s ahead of the key ECB monetary policy decision.
Main Topics in Asia
US Treasury Mnuchin says has scheduled a call with China for trade talks Tuesday evening (US time)
EU Sources: Second Brexit delay could go on until March 2020 – Reuters
UK’s Philip Hammond suggests MPs could revoke Article 50 to prevent no deal sinking the value of pound – The UK Telegraph
Labour’s Corbyn met DUP’s Dodds to try to break Brexit deadlock – Daily Mirror
Fed’s Quarles – Fed is data driven, White House comments do not factor in
Fed’s Clarida: The Federal Reserve’s Review of MP Strategy, Tools, And Communication Practices – Full Speech
A nice beat in the Australian Consumer Sentiment showing budget has been well received in April 19 – Full Report
BOJ Governor Kuroda says the 2% inflation target assists in long-run currency stability
Gold: Cautious start to the crucial day around $1300
WTI Technical Analysis: 4hr stochastic slens bearish and bears eye a run to 4HR 50-SMA
RBA’s Debelle: Labor market has been surprisingly strong, Aussie bounces
Key Focus Ahead
Markets buckle up for a hectic Super Wednesday, with plenty of key event risks due on the cards that are likely to trigger huge volatility across the fx board in the day ahead. The immediate focus remains on the relevant macro news from the UK docket due at 0830 GMT. Including the monthly GDP figures, industrial production and trade balance. However, the main market mover for the GBP is likely to be the details/ outcome from the European Council Summit on Brexit due later in mid-Europe. EU leaders are likely to decide the UK’s destiny that is most likely seen as a longer extension until March 2020.
Also, in focus remains the European Central Bank (ECB) monetary policy decision due to be announced at 1145 GMT, followed by Draghi’s presser at 1230 GMT. Markets have already priced-in a dovish ECB outlook on the monetary policy and economy, given the recent weak fundamentals and US-EU trade risks. While Draghi speaks, the US CPI report will also be closely eyed for fresh hints on the US interest rates outlook and ahead of the crucial FOMC March meeting minutes.
Besides these big events, the EIA crude stocks data will be watched for fresh direction on oil prices while the speeches from the FOMC member Quarles and ECB Governing Council member Coeure will grab some attention.
EUR/USD waits for the ECB, FOMC around 1.1260
EUR/USD is now attempting some consolidation in the top of the weekly range near 1.1260 ahead of key events later today. The ECB meeting will be the salient event in Euroland, where expectations are tilted towards a somewhat dovish message from the central bank.
GBP/USD struggles around 1.3050 ahead of UK data, EU summit
The GBP/USD pair recovered during the early Asian session as positive headlines concerning Brexit pleased buyers. Though, caution ahead of the key EU summit and few other top-tier data/events from the US and the UK confined additional moves afterward.
Could the ECB help the Euro?
So while there’s a small chance the ECB could help the euro by talking about possible stabilization in data, there’s still a lot for the central bank to be worried about.
US CPI Preview: Steady state inflation
Annual core inflation is predicted to be unchanged at 2.1% in March, with the monthly change moving to 0.2% from 0.1% in February. Headline consumer inflation will rise to 1.8% on the year from 1.5% as the monthly variation rises to 03% from 0.2%
FOMC Preview Minutes of the March 19-20 Meeting: The logic of projection
The Federal Reserve will release the edited minutes of the March 19th-20th Federal Open Market Committee (FOMC) on Wednesday April 10th at 2:00 pm EDT 18:00 GMT.
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