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The renewed US-China trade tensions, escalating Hong Kong protests and poor macro news from leading Asia-pac economies once again induced a risk-off market profile this Thursday. Markets witnessed a shift in the risk sentiment, with the Asian stocks and Wall Street futures falling back into the red zone while Treasury yields pared back gains. The flight to safety put a fresh bid under the US dollar across its main peers while gold prices also firmed up slightly to trade above $ 1460 levels.

Amongst the G10 currencies, the Aussie dollar was the weakest, as a big miss on the Australian Oct jobs fanned RBA rate cut bets. Further, the downbeat Chinese activity numbers exacerbated the pain in the Antipodean, knocking-off AUD/USD to monthly lows just under the 0.68 handle. The Kiwi also tracked the losses in the Aussie dollar and reversed RBNZ-led rally, with NZD/USD downed to near 0.6385 region. The Japanese yen, on the other hand, held the higher ground vs. the greenback despite poor Japanese Q3 GDP data. The prevalent risk-off sentiment dragged USD/JPY lower to hit weekly lows near 108.60. Meanwhile, USD/CAD traded with mild gains just above the 1.3250 level, as the resource-linked Loonie seemed to be somewhat supported by higher oil prices.

Ahead of the European open, the EUR/USD pair remains pressured around the 1.10 handle while the GBP/USD pair slips below 1.2850, as markets await fresh economic releases for the next direction.

Main Topics in Asia

Farm purchases disrupt US-China trade talks

US Pres. Trump: Turkey’s S400 buys creates serious challenges for US

EU’s Hogan: UK consumers will expect EU standards in FTA – RTE

Russia’s Pres. Putin slams sanctions, says they impede global growth – Reuters

Fed’s Daly: Fed is very focused on getting inflation higher

Tories offer Nigel Farage eleventh-hour deal – The Telegraph

Japan Preliminary Q3 GDP arrives at 0.1% QoQ vs. 0.2% expected

Expert: US provokes China with Taiwan Straits transit, pressures trade talks – Global Times

Australian Employment Change arrives at -19k in Oct vs. +15k expected

RBNZ’s Bascand: We can move rates at Feb decision, if needed

Fed’s Harker: FOMC should hold steady

Hong Kong’s civil unrest and chaos enters a fourth day this Thursday

China’s Oct data dump: Downbeat across all indicators

UK Brexit Party leader Farage: Will stand down no more candidates beyond the 317 Conservative seats        

Key Focus Ahead

Another hectic EUR economic calendar built up for the traders, as it kicks-off with the key German Preliminary Q3 GDP release, dropping in at 0700 GMT, soon followed by the Swiss Producer and Import prices due at 0730 GMT. Next of relevance remains the UK Retail Sales data for October lined up for release at 0930 GMT and Eurozone Preliminary Q3 GDP report at 1000 GMT. Amid the data releases, speech by ECB Vice President De Guindos and UK political developments will be closely watched.

However, the main market driver will continue to remain the US-China trade negotiations, especially after the WSJ reported on Wednesday that the US-China trade talks have hit a snag over farm purchases. Besides, the US PPI and Jobless Claims data, due at 1330 GMT, will keep the NA traders busy. Markets will also stay focused on a slew of Fedspeak and the US weekly EIA Crude Stocks data due on the cards at 1600 GMT.

When is the German Preliminary Q3 GDP and how could it affect EUR/USD?

German Gross Domestic Product (GDP), due at 07:00 GMT, is expected to show the economy contracted 0.1% QoQ in June to September (Q3), having decreased by 0.1% in the first quarter. A negative GDP print won’t be a surprise and could strengthen the bearish pressures around the EUR.  

GBP/USD lingers over trade/political news, UK Retail Sales in focus

Optimism surrounding the UK’s political plays confronts the broad US dollar (USD) strength ahead of the British Retail Sales data for October. That said, the GBP/USD pair hovers below 1.2850 while heading into the London open on Thursday.

German Third Quarter GDP Preview:   Improving sentiment will limit recession

GDP expected to show the second quarter of economic contraction. Investor sentiment has rebounded limiting the impact of negative growth. Economic data has improved in several important categories.