The Aussie dollar enjoyed good two-way business in Asia this Thursday, having initially rallied to 0.7167 highs on the better Australian jobs report. But the upside was short-lived and the rally got sold-off into the National Australia Bank (NAB) mortgage rate hike, knocking-off the AUD/USD pair to the lowest levels in twenty days just ahead of the 0.71 handle. The Kiwi reversed course and fell back into the red below the 0.68 level, tracking the sharp decline in the Aussie.
Meanwhile, cautious trading in the Asian equities amid concerns over the US-China trade and the US shutdown worries left the USD/JPY pair trapped in a tight range near 109.50 levels. Both the Euro and Cable traded modestly flat, awaiting fresh cues from the ECB decision and Brexit headlines.
On the commodities front, both crude benchmarks traded on the back foot amid softer risk tones and the US inventory build gold futures on Comex slipped to trade near 1280 region, despite negative Treasury yields.
Main Topics in Asia
Australia adds 21,600 jobs in December, jobless rate drops to 5.0%
WTI: Steady near $ 52.50 in Asia, focus on EIA data
Bank of Korea leaves rates unchanged at 1.75%
UK FinMin Hammond to call for business support post-Brexit – Reuters
Australian major bank hiked home loan rates, Aussie slips from 0.7170
BOK’s Lee: rapid economic slowdown unlikely, time not right for further stimulus
Gold Technical Analysis: $1,279 is the level to beat for the bears
Trump: Will do State of the Union address when the shutdown is over
RBI to cut rates by mid-year – Reuters poll
Key Focus Ahead
The ECB monetary policy announcement (at 1245GMT) followed by Draghi’s press conference (at 1330 GMT) remain the main event risks for today’s European trading session, with Draghi expected to downgrade the economic assessment while maintaining the monetary policy settings. Also, of note remains the Euro area flash manufacturing and services PMI reports that will start trickling in from 0815 GMT. Meanwhile, the UK docket remains absolutely data-dry, as the focus solely remains on the Brexit-related developments.
Later in the NA session, the US Markit flash manufacturing and services PMI data will be reported at 1445 GMT. Next of note remains the EIA crude stocks data due at 1530 GMT, which is likely to have a significant bearing on the oil markets. A pair of Senate votes on the re-opening of the US government shutdown will be eyed at 1930 GMT for fresh dollar trades.
EUR/USD: Focus on ECB, dovish talk likely priced in
The currency pair could rise above 1.14 ahead of the European Central Bank (ECB) rate decision, the flag breakout on the 15-minute chart indicates. The central bank is expected to keep policy unchanged today and acknowledge the recent slowdown in the biggest economies of Eurozone – Germany, France, and Italy.
GBP/USD: Bulls tested 1.3100 on increased odds of Brexit delay
The GBP/USD pair extended its rally into a fourth day in Thursday’s Asian trading and hit fresh two-month tops of 1.3096 amid a potential Brexit delay that continues to underpin the sentiment around the pound.
ECB to downgrade its risk assessment to “tilted to the downside”– Citi
The European Central Bank (ECB) is due to announce its first monetary policy decision later this Thursday at 1245 GMT, with the analysts at Citi expecting no changes to its monetary policy settings.
Will ECB Send EUR Below 1.13? Plus Battle in Washington Heats Up
The next 24 hours should be an interesting one for the forex market as investors tune into the European Central Bank’s monetary policy announcement and a pair of Senate votes that could end the government shutdown.