- Forex today witnessed mild risk-on with Chinese yuan gaining ground against the greenback and JPY crosses on the rise.
- Fed is considering the wait-and-see approach on future rate hikes, according to the Wall Street Journal.
- President Trump agreed with China’s Commerce Ministry that a trade deal could be reached within the 90-day period.
Forex today saw mild risk-on action with Chinese yuan pushing higher against the greenback and JPY crosses picking up a bid, tracking mild gains in the Asian equities.
The Dow Jones Industrial Average (DJIA) which was down more than 700 points at one point Thursday, staged a V-shaped recovery after the Wall Street Journal (WSJ) reported that the Fed is considering whether to signal a new wait-and-see mentality at their December meeting.
The late recovery in the US stocks likely put a bid under the Asian equities. Major names like Japan’s Nikkei, Shanghai Composite, South Korea’s Kospi reported moderate gains. As a result, JPY crosses regained poise.
Notably, the AUD/JPY rose 0.10 percent to 81.69, having clocked a low of 80.93 in the overnight trade.
The risk assets may have also received a boost from Trump’s tweet, which China’s comments on their commitment to achieving a trade deal.
It particularly helped the CNH (offshore yuan exchange rate) push higher against the greenback. The USD/CNH was looking north, having witnessed a falling wedge breakout in early Asia. The bullish pattern, however, failed after Trump tweeted his take on a trade deal, and the pair fell to a session low of 6.8657.
Meanwhile, the USD/JPY extended its overnight rebound from the all-important 100-day MA support to levels just below 113.00. BOJ’s Kuroda ruled out additional stimulus, but at the same time squashed hopes of near-term taper.
Looking forward, the risk assets may cheer Trump’s tweet and reports stating that Fed officials are considering signaling a wait-and-see approach on rate hikes next year. As a result, the US dollar may remain on the defensive and JPY crosses better bid ahead of the US non-farm payrolls and wage growth release.
As of writing, the Federal-funds futures used to place bets on the course of rates, show just a 7.9% chance that there will be three rate increases by June 2019, down from 30% a month ago, according to the Wall Street Journal. That rate hike probability would slide even further if the wage growth figure prints well below estimates.
Key news in Asia
US President Trump tweets that a trade deal with China likely within the next 90 days
BOJ’s Kuroda: time not ripe to exit from our monetary easing
- BOJ official: BOJ holds 77.5 percent of Japan’s total ETF market
China Commerce Ministry: to appropriately deal with trade frictions
Chinese Yuan will breach 7 per USD within 6 months – Reuters poll
Trump is losing his own trade war against himself – Bloomberg
What’s brewing in the majors?
- EUR/USD: Value of puts (bearish bets) hits 6-month low ahead of Eurozone GDP and US NFP release
- GBP/USD trading softly into 1.2750 with US NFP in the barrel
- USD/JPY Technical Analysis: 100-day MA again reverses pullback, BOJ’s Kuroda rules out near-term taper