Improved risk appetite offered a sigh of relief across the fx board in Asia this Wednesday, as markets shrugged-off the renewed tensions over the US-Sino trade spat. However, most majors held onto tight trading ranges, as markets took a breather ahead of the key panel discussion at the European Central Bank (ECB) Sintra Forum.
Amongst the Asia-pac currencies, the USD/JPY pair managed to take on the recovery above the 110 handle, but lacked further upside momentum amid subdued US dollar and flattening US yield curve. The Antipodeans also staged a minor comeback, with the Aussie extending its bounce from 2018 lows. The Kiwi is back above the 0.69 upside barrier, having ignored downbeat New Zealand’s current account data.
Looking at the related markets, the Asian equities attempted a tepid bounce, but the sentiment was roiled by losses in China stocks. Also, mixed trading seen in oil prices, despite a drawdown in the US crude inventories while gold prices continued to flirt near the $ 1275 support area.
Main topics in Asia
Stats New Zealand reported a seasonally adjusted current account deficit for the March 2018 quarter at $3 billion- the highest level since the 2008 global financial crisis.
Some Bank of Japan (BOJ) board members feel it is appropriate to ditch the timeframe for achieving the inflation target because investors are linking the timeframe to changes in the monetary policy, the minutes of the BOJ’s April policy meeting revealed on Wednesday.
The US Treasury yield curve continues to flatten and could invert as early as next week. The spread between the 10-year yield and the 2-year yield fell to 34 basis points today – the lowest level since August 2007.
South Korea’s Foreign Minister Kang Kyung-wha is on the wires now, via Livesquawk, commenting on the North Korean issue.
Asian equities dipped in early Wednesday action as the US’ tariffs on Chinese goods, with promises of more on the way, continued to eat away at market sentiment “¦
Key Focus ahead
There is nothing of note to be reported from today’s macro calendar, except for the second-tier releases in the German PPI, UK CBI industrial order expectations and US current account data. Besides, the ECB-speaks by the Governing Council members Lautenschlaeger and Coeure will be delivered at 0800 GMT and 1030 GMT respectively.
Markets look forward to the ECB Central Banking Forum held in Sintra, Portugal. The day 2 sees the top central banks’ Heads participating in a Panel Discussion on the topic – ‘Microeconomics of price and wage-setting’.
The Policy panel discussion scheduled at 1330 GMT includes:
- ECB President Draghi
- Bank of Japan (BoJ) Governor Kuroda
- Reserve Bank of Australia (RBA) Governor Lowe
- Federal Reserve (Fed) Chairman Powell
- Moderator: Stephanie Flanders, Bloomberg Economics
Following the panel discussion, the US existing home sales and EIA crude inventories report will be published, which could offer some fresh trading impetus to the NA traders, as the focus shifts towards New Zealand’s Q1 GDP figures slated for release at 2245 GMT.
The EUR/USD is on the defensive, having failed to take out the bearish (falling) 5-day moving average (MA) in Asia, however, the pair may pick up a bid in Europe on fears the US treasury yield curve could invert soon.
Wednesday is another thin showing for the GBP on the economic calendar, and traders’ focus will remain locked on the upcoming Bank of England (BoE) rate decision, due on Thursday at 1100 GMT, where the BoE is expected to hold off once again on a rate increase.
Existing Home Sales serve as an indicator for the important housing sector and it has a significant impact on markets. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
The Barclays Research Team offers a sneak peek at what to expect from the Bank of England (BOE) ‘Super Thursday’.
On June 22nd and 23rd, energy ministers from the OPEC (Organization of the Petroleum Exporting Countries) and ministers from countries outside the organization will meet in Vienna to discuss future oil policy.