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Forex today cheered the risk-on market environment fuelled by the Trump’s comments on trade and Fed policy that boosted the odds of a trade deal between the US and China.

Among the Asia-pac currencies, the Aussie jumped to 0.7230 on improved trade sentiment but lacked further upside momentum and consolidated ahead of the 0.72 handle amid ongoing broad-based US dollar strength. The Kiwi also traded firmer just below the 0.6900 level, as higher oil prices and the rally in the Asian equities boosted the higher-yielding currency. The USD/JPY pair hit a fresh 6-day highs at 113.52 and consolidated the gains near the last almost throughout the Asian trading.

The gains in the Asian stock markets were led by the Japanese benchmark, the Nikkei 225 index, which rose over 2% to trade near 21,600 levels. Meanwhile, gold prices on Comex traded modestly flat around the 1250 barrier heading into the critical US inflation report.

Main Topics in Asia

On Whirlwind EU Tour, Theresa May Rebuffed by Merkel, Juncker, Rutte, Tusk

Australia: Consumer Sentiment holds the line – Westpac

US Treasury, USTR reach post-Brexit insurance accord with UK – Reuters

Trump will intervene in Huawei case if it were good for the US

Trump: would be foolish for Fed to raise rates next week

Japan set to spend about JPY 3 trillion in second extra budget – Reuters

Asia to grow as expected in 2018 and 2019, trade war poses downside risks – ADB

S&P: Global economy to see a necessary slowdown in 2019

Oil continuing its familiar sideways pattern, WTI getting comfy near $52.00

Key Focus Ahead

A thin showing on the macro data front extends into the European session, with nothing of note until the release of the Eurozone industrial production data at 1000 GMT. Also, the major central banks” speakers have switched to the sidelines ahead of the ECB policy decision tomorrow and next week’s Fed verdict.

In the NA session, the key US CPI report for November will be released at 1330 GMT that is likely to arrive at 2.2% vs. 2.5% previous while the core figures are seen a tad firmer at 2.2% vs. 2.1% last.  At the same time, the Canadian third-tier capacity utilization data will be reported.

The main event risk for today is likely to be the meeting between the EU”s Juncker and the Italian PM Conte due at 1500 GMT, as both the leaders are likely to discuss the Italian budget. Further, the official US government crude stockpiles data will be published at 1530 GMT, followed by the US monthly budget statement at 1900 GMT.

EUR/USD may defend key support on the rising odds of US-China trade deal

The  EUR/USD  pair may defend the support of the trendline connecting the Nov. 13 and Nov. 28 lows for the second day on the back of  risk-on action  in the equities.

GBP/USD set for a break lower from 1.2500 as Brexit evolution continues

Wednesday will be clean of UK economic data, and Thursday will be likewise empty, with only RICS Housing Prices on the docket early Thursday at 00:01 GMT, well before the London markets open.

US CPI Preview: Inflation to decline, core rate stable

Annual core inflation which excludes  food and energy prices is predicted to increase to 2.2% in November from  2.1%. On the month no change is expected from the October gain of 0.2%.  

SNB to maintain a dovish tone on Thursday – HSBC

In the view of the analysts at HSBC bank offer a sneak peek at what to expect from the Swiss National Bank (SNB) monetary policy decision due later this week.