Mixed headlines on the US-China trade talks and a likely deal overnight translated into a cautiously optimistic trading environment in Asia on the final trading day of the week. The FX markets were left in a tizzy amid a lack of clarity on the trade developments and growing skepticism. Therefore, most majors stuck to tight trading ranges, as the US dollar consolidated its latest drop vs. its main rivals.
Among the Asia-pac currencies, the USD/JPY pair traded around a flat line near 108.60 despite a bounce in the Asian stocks from three-week lows while the Aussie recovery from multi-day lows was limited by the 0.68 handle. The Kiwi also posted small gains just ahead of the 0.64 handle. The Antipodeans lacked follow-through on the upside amid a retreat in oil and lackluster trading in gold prices. Positive Treasury yields kept the yellow metal in check.
Heading into a hectic European session, both the EUR/USD pair and GBP/USD cling to their recovery gains, with the Fiber holding above 1.1050 while the latter keeps the 1.29 handle.
Main Topics in Asia
Ex-Fed Chair Yellen: There is good reason to worry about the US economy sliding into recession – CNBC
Japan CPI (YoY) Oct 0.2% (Est 0.3%; Prev 0.2%)
Trump wants Senate trial, expects Joe Biden to testify -White House – Reuters
China Stats Bureau revises 2018 GDP higher by 2.1%
Japan’s Nishimura: Want to keep a close watch on impact of weakness in overseas economies
China’s Military urges US to stop provocative acts in South China Sea
S&P stands by its Hong Kong rating despite turmoil – Bloomberg
China said to have asked big banks to increase loans to the manufacturing sector
Key Focus Ahead
Markets gear up for a big day ahead, with global manufacturing sector activity data to dominate and throw fresh light on the state of the global economy. First up on the EUR calendar is the final revision of the German Q3 GDP, dropping at 0700 GMT. Soon the Euro area Markit Preliminary Manufacturing and Services PMI releases will start trickling in from 0815 GMT, with the key German and Eurozone reports due at 0830 GMT and 0900 GMT respectively. The new UK flash Manufacturing and Services PMI readouts by Markit will be closely watched at 0930 GMT. Meanwhile, the speech by the new ECB President Lagarde, due at 0830 GMT, is expected to steal the show, as she is due to make her first policy speech at the European Banking Congress, in Frankfurt.
We have a busy NA session as well, with the ECB Governing Council member Weidmann’s speech and Canadian Retail Sales data dropping in ahead of the US open. Later on, the US Markit Preliminary Manufacturing and Services PMI data will be published at 1445 GMT, followed by the US Michigan Consumer Sentiment Index, scheduled at 1500 GMT. In the American mid-morning, Baker Hughes oilfields services company will release the US Oil Rigs Count data at 1800 GMT.
Despite an eventful Friday docket, the US-China trade-related developments will likely supersede and continue to direct the risk trends, as we wrap up a data-light but cautious-trading dominated week.
EUR/USD: Focus on new ECB President Lagarde’s first policy speech
EUR/USD looks heavy with the weekly candle showing buyer exhaustion. ECB’s Lagarde is unlikely to talk dovish in her first major policy speech. The focus is also on the preliminary Eurozone and Germany PMI numbers.
GBP/USD challenges 3-day downpour ahead of UK PMIs
Given the shift in the market’s trade sentiment, GBP/USD bucks the three-day-old downtrend while slightly bid above 1.2900 ahead of the London open on Friday. Brexit Party to unveil its policies while the first preliminary PMI from the UK will also be the key to watch.
Gold technical analysis: Eyes support at $1,456
Gold prices could drop to support at $1,456, the candlestick pattern on the daily chart indicates. On Thursday, the yellow metal closed below $1,466 – the low of the Wednesday’s Doji candle – confirming a bearish reversal.
Euro-zone PMIs preview: Modest expectations may be too high, three EUR/USD scenarios
Flash euro-zone PMIs are set to show an improvement in November. High expectations may lead to a downfall for EUR/USD. Only a substantial surprise has room to lift the common currency. ECB’s Lagarde’s speech may steal the show.