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Forex today in Asia was characterized by a better risk environment, fuelled by renewed optimism over the US-China trade talks. As a result, the Asian stocks stalled its tumble while the Yen lost ground to the US dollar, pushing the USD/JPY pair back to the 111.50 level. The WSJ report that cited the US reaching out to China for a new round of trade talks, weighed down on the US dollar across the board, in turn boosting the risk currencies -the Aussie and pound. The Aussie got a further boost from stellar Australian employment data. However, the Kiwi and Loonie remained on the back foot amid weaker oil prices and impending NAFTA talks. Both the EUR and the GBP trod water ahead of the key central bank meeting that will offer fresh trading impetus across the fx space.

Main topics in Asia

Britain to publish next batch of ‘no deal’ Brexit advice papers – Reuters News

Britain will publish a second batch of “no deal” Brexit papers today, giving the public and businesses advice on mobile phone roaming charges, environmental and vehicle standards, according to Reuters  News.  

Australia adds whopping 44,000 jobs in August, a big beat on expectations

Australia  unemployment rate steadied at 5.3 percent in August, even as the economy added a whopping 44,000 jobs, the latest data published by Australia Bureau of Statistics (ABS) showed this Thursday.  

Canada’s Freeland: Officials will continue NAFTA talks on Thursday

Canadian Foreign Minister Freeland is on the wires now, via Reuters, commenting on the US-Canada talks on the North Atlantic Free Trade Agreement (NAFTA).

Singapore MAS’ Mennon: Global growth bound for a slowdown in 2019

Ravi Mennon, Managing Director at Monetary Authority of Singapore – the Singapore central bank, was on the wires last minutes, via Reuters, with the key headlines found below.

Moody’s: US dollar to remain a dominant global reserve for foreseeable future

The  US dollar  will likely remain a dominant global reserve currency foreseeable future, despite the rise of alternatives like the Chinese renminbi, according to rating agency Moody’s.  

US firms in China feeling “clear and far reaching” trade war pinch – Survey

According to a joint survey of hundreds of firms, conducted by AmCham China and AmCham Shanghai and published on Thursday, the US firms in China are bearing the brunt of the tariffs amid escalating trade tensions between the US and China.

Turkey’s Official Gazette: Turkey seeks to ban foreign currency transactions for property sales and rental agreements

Key Focus ahead

Markets are eagerly awaiting the monetary policy announcements from the Bank of England (BOE), European Central Bank (ECB) and Turkish central bank (CBRT) due on the cards later in the European session. Although the BOE and ECB are expected to keep their monetary policy setting unchanged, the tone and language in their respective statements will drive the market sentiment. For the ECB, the staff economic projections will be the key focus, after Bloomberg reported yesterday that the ECB is likely to slightly lower the economic growth projections.  

Both the BOE and CBRT rate decisions will be announced at the same time at 1100 GMT while the ECB verdict will be out at 11.45 GMT, followed by the ECB President Draghi’s press conference at 1230 GMT.

We also have the parallel release of the US August CPI report, with the headline CPI figure to rise to 0.3% m/m versus 0.2% previous while the core reading is expected to steady at 0.2% m/m. On an annualized basis, the US CPI is expected to soften to 2.8% in Aug versus 2.9% last. The US docket also sees the release of the weekly jobless claims among other minority reports. Besides, the speeches by the FOMC members Quarles and Bostic will also grab some attention later on Thursday.

EUR/USD: Focus on ECB’s economic forecasts and Draghi’s tone

The  bull breakout  witnessed in the EUR/USD 4-hour chart could fail, especially if the US August CPI, due at 12:30 GMT, beats estimates by a wide margin, reinforcing hawkish Fed expectations. On the other hand, if Draghi sounds neutral/hawkish, then “¦

GBP/USD: A typical caution trading ahead of BOE decision

Having faced rejection near the 1.3080 in the overnight trades, the  GBP/USD pair entered into a phase of consolidation around the midpoint of 1.30 handle, as traders gear up for the Bank of England (BOE) monetary policy announcement due at 1100 GMT.

BoE vs. ECB – Who will be the Biggest Surprise?

Thursday  is a big day for euro and sterling. There are 2 monetary policy announcements on the calendar and the U.S. consumer price report.  

ECB Preview: Focus on new macroeconomic projections – Nomura

Analysts at Nomura offer a brief preview of what to expect from today’s  ECB monetary policy meeting, with the interest rate decision due out at 1145 GMT.

US: Headline CPI to increase 0.3% m/m and 2.8% y/y – Barclays

The Barclays Research Team is out with a sneak peek at what to expect from today’s US August CPI report slated for release at 1230 GMT.

How to trade the US Inflation data with USD/JPY

The US Consumer Inflation data and especially Core CPI are critical the US Dollar. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.

 

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