The US-EU trade agreement quelled trade tensions and boosted the demand for the risk assets in early Asian trades at the expense of the US dollar. The greenback remained broadly undermined, despite the risk-on rally in the Treasury yields. However, the risk sentiment turned sour heading towards the Asia closing, as markets still remained skeptical about the US-EU trade deal while increased cautiousness ahead of the European Central Bank (ECB) monetary policy announcements also dampened the market sentiment.
Among the Asia-pac currencies, the recovery in the Chinese Yuan helped buoy the sentiment around the Yen alongside the renewed risk-aversion wave the gripped the Asian equities and rallying 10-year JGB yields. However, the Antipodeans failed to benefit from notable US dollar supply and firmer Yuan, as resurfacing China slowdown concerns and negative copper prices. The Aussie was the main laggard this session while the Yen was the top gainer, knocking-off AUD/JPY, the risk barometer, -0.50% lower.
Meanwhile, both crude benchmarks pared back gains, with WTI reversing from the $ 70 mark. The yellow metal traded modestly flat near $ 1230 levels while copper futures on Comex dropped nearly 1%.
Main topics in Asia
EU-US trade talk: what has been agreed to
Following the European Union and US trade statement by the US’ President Trump and the EU’s Juncker, loose agreements on trade have been made between the two, but nothing is “on paper”, and “¦
Bank of Japan to look at rebalancing ETF purchases – Nikkei Review
According to the Nikkei Asian review, the Bank of Japan (BoJ) will be looking at making adjustments to the ETFs that the central bank purchases as part of its monetary policy.
USD/CNH hits one-week low of 6.7380
The USD/CNH (offshore Yuan exchange rate) fell to 6.7380 today – the lowest level since July 19 and was last seen trading at 6.75.
Oil jumps on Saudi Arabia shipping lane attack, WTI back over $70.00
Crude oil is on the high side once again for Thursday, following on Wednesday’s bullish spike on news that Saudi Arabia is seeing constraint in a major shipping lane.
Japanese Labour Ministry plans to raise its minimum wage benchmark
Reuters is out with the latest update on the Japanese labor market, noting that the Labour Ministry is likely to recommend a raise in national average minimum hourly wage.
China central bank lifts yuan reference rate by the most in 3 weeks
The People’s Bank of China (PBOC) raised its yuan midpoint rate to 6.7662 – the biggest one-day fix in percentage terms since July 5.
Sources: US open to steel duty waiver for India if it lowers export volume
The Financial Express, India’s financial daily, quoted unnamed sources, as saying the US has indicated that it will consider a waiver to India from its 25% additional tariff on steel, provided New Delhi offers an acceptable proposal to lower the volume of its supplies “¦
New Zealand FinMin Robertson: Economic growth to pick up in H2 2018
New Zealand Finance Minister Robertson is on the wires now, via Reuters, expressing his take on the economic prospects.
Key Focus ahead
We have nothing significant to be reported from the Euroland, except for the second-tier German Gfk consumer climate and Spanish employment data, as market gear up for the key ECB monetary policy announcements due later today at 1145 GMT, followed by Draghi’s presser at 1230 GMT. No surprises are expected from the ECB, as a deposit rate hike still remains a distant dream, not expected until the summer of 2019.
We have parallel releases from the US docket, including the US durable goods orders, jobless claims and good trade balance.
EUR/USD has created a pennant pattern ahead of the ECB rate decision
The common currency may close today above 1.1745, confirming a pennant breakout or a bearish-to-bullish trend change if President Draghi shrugs off trade fears and reiterates end its 2.6 trillion euro ($3.0 trillion) bond-buying scheme by the close of the year.
GBP/USD claims the 1.32 level on trade headlines, bulls looking to maintain control
Thursday is devoid of any meaningful data for the UK, but some volatility may be seen when the US Durable Goods Orders for June drop at 12:30 GMT, which are expected to improve from -0.6% to 3.0%.
ECB: Draghi to probably dodge any questions on timing of next rate move – BNPP
Analysts at BNP Paribas (BNPP) offer a sneak peek at what to expect from today’s European Central Bank (ECB) monetary policy announcement that will be followed by President Draghi’s press conference at 1230 GMT.
ECB Preview: 2 key things to watch in an otherwise quiet meeting
Six years to the day after ECB President Mario Draghi vowed to do “whatever it takes” to preserve the euro, the currency union is doing is certainly on stronger footing than it was then.
How to trade the US Durable Goods Orders with EUR/USD
The US Durable Goods Orders reflects investment, is eyed by the Fed, and moves currencies as well. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
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