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The USD bulls regained poise in Wednesday’s Asian trading while the Aussie got hammered across the board following a miss on the Australian headline and core CPI figures for the first quarter. Disappointing Australian inflation report led the markets to re-price their RBA rate cut forecasts to as soon as the next month, drowning the AUD/USD pair to six-week lows at 0.7027. The Kiwi also lost ground in tandem with its OZ peer, the AUD, and hit fresh three-month lows of 0.6614. The sentiment around the Antipodeans was also dented by a broad decline across the commodities space, with oil prices extending its retreat from six-month tops. Gold prices on Comex headed back to YTD lows below 1270 levels, despite mixed Asian equities and negative Treasury yields.

Meanwhile, the Canadian dollar traded firmer again this session, as markets resorted to repositioning ahead of the Bank of Canada (BOC) rate decision. The safe-haven Yen picked-up bids towards Asia closing but traded within its familiar 111.75-112.00 range while both the European currencies, the Euro and the GBP, traded little changed, awaiting fresh impetus from the German data and Brexit-related headlines.

Main Topics in Asia

Labour says Theresa May unwilling to offer key Brexit concessions – The Guardian

Venezuela imports crude for the first time in five years – Bloomberg

PBOC injects liquidity via one year TMLF

WH: USTR Lighthizer and Treasury Sec. Mnuchin to travel to Beijing for trade talks starting April 30

Australia’s Q1 CPI arrives at 0.0% q/q, misses estimates (Aussie slumps)

AUD/USD: Premium for put options rises with the weak Aussie CPI release

AUD/USD: Premium for put options rises with the weak Aussie CPI release

Brent Oil Technical Analysis: Rally stalls with double top on hourly chart

IMF’s Lagarde: Had a meeting with the PBOC Governor Yi regarding international cooperation

UK employers fear Brexit hit to economy, but plan more hiring – REC Survey

Gold: Bears target $1263 amid broad USD demand

Key Focus Ahead

Markets gear up for a busy EUR economic calendar, the first one after the Easter holiday break, with the key German IFO survey on the radar for fresh hints on the Euro area growth outlook. The headline German business climate index for April (due at 0800 GMT) is seen a tad firmer at 99.9 vs. 99.6 previous. Should the data disappoint the Euro will take a fresh beating across the board. At the same time, the Swiss ZEW survey for April and the European Central Bank (ECB) Economic Bulletin will be published. From the UK docket, the second-tier macro release in the March public sector borrowing data will be reported at 0830 GMT.

Moving on, the Bank of Canada (BOC) monetary policy decision at 1400 GMT and the post-policy press conference at 1415 GMT will headline the NA trading. The BOC is likely to keep the rates on hold but its assessment of the economic outlook and the take on the future policy path will be closely eyed for any big moves in the Canadian dollar. Also, the focus will be on the EIA crude stocks data dropping in at 1430 GMT for fresh oil trades and its eventual impact on the Loonie. Meanwhile, the US calendar remains data-empty for today.

EUR/USD: Key support exposed ahead of the German IFO data

The bearish-EUR case may strengthen further if the forward-looking  German business climate, expectations and current assessment indices for April, published by the IFO, miss estimates by a wide margin. The data is due for release at 08:00 GMT.  

GBP/USD: Sellers in command amid 200-day SMA break, Brexit pessimism

Ongoing Brexit deadlock and likely future troubles for the UK PM May joins dip beneath 200-day SMA to please the bears. The absence of economic data/events pushes traders more towards qualitative factors.

Bank of Canada Rate Policy Preview: Shift to neutral

The Bank of Canada will maintain its overnight target rate at 1.75% when it concludes its policy meeting on Wednesday, maintaining the pause which began last October.  

FX: How to trade in a low volatility market

This month,  volatility  in the currency market fell to its lowest level in five years. In times like this, many analysts argue that big moves are on the horizon but it could be upwards of a year before that happens.