The market mood was mostly cautious in Tuesday’s Asian trading, fueled by the renewed US-China trade deal doubts, spiraling unrest in Hong Kong and US President Trump’s dig at Fed again. Amid tepid risk sentiment, the US dollar failed to build on its overnight recovery and fell back in the red against most majors, except for the Antipodeans. Meanwhile, Gold prices consolidated the recovery around $ 1470, as markets await fresh cues on the trade front.
Across the G10 currencies, the Aussie was the weakest after the Reserve Bank of Australia (RBA) November meeting’s minutes signaled at the likelihood of more easing in the coming months. AUD/USD dropped sharply to 0.6785 before recovering to 0.6800 levels. The Kiwi also tracked the Aussie’s weakness and traded on the back foot around the 0.64 handle. The Yen regained ground vs. the US dollar amid mixed Asian equities and subdued Treasury yields, as USD/JPY traded around 108.60 region.
Heading into the European open, both the EUR/USD pair and Cable are back on the bids, looking to extend their recent recovery.
Main Topics in Asia
RBNZ’s Hawkesby: We need to keep rates at low level for some time
EU trade boss tells UK PM he will get ‘bare bones’ Brexit trade deal or none at all – The Sun
RBA minutes: Board prepared to ease policy further if needed
Japan Economic Minister: Doing everything possible to pass the trade bill in the current Diet
Japan ruling party’s Nikai: Need JPY 10 trln extra budget – Jiji
BOJ’s Kuroda: It’s possible for BOJ to deepen negative rates beyond -0.1%.
Japan’s Aso: Tax revenue for FY19 may be smaller than expected
Hong Kong university standoff extends, passenger trains temporarily suspended
China-US may still have a long way to go to end the tradewar – Global Times
US Pres. Trump: Told Powell the Fed Rate is set too high relative to the interest rates of other competitor countries
USD/INR slips back below 72.00 as markets react to US-China trade jitters
Key Focus Ahead
Markets brace for a relatively light EUR macro calendar, with the second-tier data lined up for release, including the Eurozone Current Account and Construction Output. From the UK docket, the CBI Industrial Trends Survey – Orders (MoM) for November will drop in at 1100 GMT. Also, in focus will remain the ITV’s political debate, which will shed more light on the UK political scenario going forward.
In the NA session, the US Housing Starts and Building Permits data will be released at 1330 GMT, alongside the Canadian Manufacturing Shipments data. At 1430 GMT, New Zealand’s GDT Price Index will be published and could have some bearing on the NZD price-action. Meanwhile, the American Petroleum Institute (API) weekly US Crude Stocks data will be closely watched at 2130 GMT.
Apart from the data, the speeches by the Fed official Williams and BOC board member Wilkins will grab some attention. However, the US-China trade-related headlines will continue to remain the main market driver.
EUR/USD: Bulls regain poise, 1.1100 back on sight?
EUR/USD bounces-off lows ahead of 5-DMA support at 1.1055. Bulls back in charge as broad USD recovery stalls amid trade woes, Trump’s tweet. Focus stays on Eurozone/ US data and trade developments ahead of FOMC minutes.
GBP/USD: On a 5-day winning streak ahead of UK’s political debate
Signs of political stability and a successful Brexit keep the GBP/USD pair bulls’ favorite as it takes the bids to 1.2950 while heading into the London open. ITV’s political debate will offer another stage to UK lawmakers after the CBI event.
Fear of Corbyn Outweighs Fear of Brexit
For starters Johnson isn’t going to deliver a hard Brexit. It will be a negotiated Brexit. A withdrawal agreement will be signed. I took a close look inside some of the recent polls and there are some interesting trends that explain what’s going on.
US Economic Outlook. Fourth quarter 2019
Three-parts accommodation, one-part trade détente baked into 2020 outlook, but is it enough to avoid a downturn? Fed’s Art of War: Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.
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