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Forex today experienced risk-off market profile, as reflected by mostly lower Asian equities and US equity futures amid a lack of progress on the US-China trade front and reports that Huawei filed a suit against the US government.

As a result, the safe-haven demand for the Yen remained underpinned, with the USD/JPY pair meandering near 111.70 levels. Meanwhile, the Aussie enjoyed good two-way business following the mixed Australian retail sales and trade figures but the upside remained limited by 0.7050 levels, as RBA rate cut calls loom. The Kiwi emerged the top gainer and headed to the 0.68 handle amid the latest leg up in oil prices. Gold futures on Comex attempted a corrective bounce in a bid to regain the 1290 barrier.  

Main Topics in Asia

UK urged to table ‘acceptable’ backstop remedies – BBC

Aussie data dump: Retail Sales (a miss of 0.2%) and Trade Balance – AUD lower

China Central Bank to skip open market operations today

China’s Finance Minister: Tax cuts are a top fiscal priority in 2019

WTI creeping up towards the hourly cloud resistance, bulls eye a break to $57.85/93 double-tops

UK Cabinet expects Brexit deal defeat nest week – UK Telegraph

Gold teasing corrective bounce amid the drop in equities

EU is pessimistic that a Brexit breakthrough is in reach – Bloomberg

Indian Rupee to weaken over 1% to 71.28 in 12 months – Reuters poll

Huawei sues US Govt saying ban on its equipment is unconstitutional – Reuters

US Pres. Trump: China trade talks going well, predicts ‘good deal’ or no deal

USD/INR prints two-month low below 70

Saudi’s Energy Minister: Kingdom is exporting 7-8 mln bpd of crude – Okaz

Key Focus Ahead

Markets gear up for a busy EUR calendar, with the ECB monetary policy decision (due at 1245 GMT) and Draghi’s presser (at 1330 GMT) likely to be the main event risks, as the Brexit deal/ no deal drama continues. The ECB is likely to leave the monetary policy settings unchanged amid weakening Eurozone economic growth but markets will watch out for any changes in the TLTROs and interest rates forward guidance for fresh EUR trades.

On the data front, the Swiss Feb jobless rate will drop in at 0645 GMT, followed by the UK Halifax house price index at 0830 GMT. At 1000 GMT, the Eurozone final Q4 GDP report will be published that is likely to have virtually no impact on the EUR markets. From the NA docket, the weekly jobless claims and Canadian building permits data will be published at 1330 GMT. Later in the American afternoon, New Zealand’s manufacturing sales report for Q4 will be released at 2145 GMT.

Besides the macro news, we have a slew of central bankers” speeches scheduled, noted below.

0930 GMT: BOE’s Tenreyro

1330 GMT: ECB President Draghi

1715 GMT: Fed’s Brainard

1745 GMT: BOC’s Patterson

EUR/USD market turns indecisive ahead of ECB, today’s close pivotal

The shared currency will likely pick up a strong bid, if the ECB’s projections match market expectations and the central bank refrains from introducing another dovish tweak to its forward guidance, having accepted in December that balance of risks are moving to the downside.  

GBP/USD: Greenback’s profit booking gains attention over Brexit noise, 1.3190 in focus

Traders gave less importance to the recent Brexit reports as the US Dollar pullback seems to dominate sentiment ahead of Friday’s key employment report. Also, in attention will be Thursday’s weekly initial jobless claims from the US.

ECB Preview: Lower macro projections set the stage for a prolonged period of policy stand-off

The ECB Governing Council is expected to keep the monetary policy unchanged while downgrading its near-term growth and inflation forecasts provided in staff macroeconomic projections.                      

US/China Trade Wars: Trump will meet Mnuchin at 11am Thursday local time (1600GMT)

Trump will meet Mnuchin at  11am Thursday local time  (1600GMT).  The  news  comes after the US trade gap with China  hit a record level, in a blow to president Trump’s America First policies.