Forex market keeps being dominated by the King US Dollar (USD) during Thursday’s Asian session as traders searched solace in the Federal Reserve’s not-so-dovish rate-cut. The US Federal Reserve announced its first rate cut, of 0.25%, since 2008 financial crisis but poured cold water on the face of policy bears as the Chairman Jerome Powell turned down the prospects of the start of the broad easing cycle.
With this, the greenback surged across the board, even ignoring the US President Trump’s early-day criticism of the Fed’s policy. The resultant flow took the funds off from Asian stocks while also fuelling the US Treasury yields.
EUR/USD, GBP/USD and AUD/USD dropped to fresh multi-month lows ahead of China’s Caixin Manufacturing PMI that helped the Aussie to stage a bounce while NZD/USD and oil also trimmed some of the previous losses. China’s private manufacturing gauge rose past 49.6 forecast to 49.9 following yesterday’s pattern. Meanwhile, USD/JPY surged to 9-week high and Gold also visited a fortnight low despite political pessimism surrounding Iran and North Korea. Further to note is upbeat Indonesia Inflation data that couldn’t help the USD/IDR rise beyond 100-day moving average (DMA).
Main Topics in Asia
Asian shares extend declines amid USD surge as Fed poured cold water on bears
China July Caixin manufacturing PMI beats expectations by 0.4
Trump: Fed waited too long to correct the mistake
US’ Bolton: North Korea missile tess do not violate pledge by Kim
White House National Security Adviser Bolton: US will extend Iran nuclear waivers for 90 days
Key Focus Ahead
Global traders now brace for the Bank of England (BOE) monetary policy meeting that is up for publishing quarterly inflation report at 110:00 GMT. Although major market players anticipate the UK central bank to maintain a hawkish tone with no policy change, looming Brexit uncertainty might not allow the Carney and Company to avoid uttering chances of future rate cuts.
For the European session start, Markit Manufacturing Purchasing Managers’ Index (PMI) data for the Eurozone and the UK can entertain traders ahead of the BOE. The manufacturing gauges are up for publishing at 08:00 and 08:30 GMT respectively wherein the regional index may remain unchanged at 46.4 but the British figure could soften to 47.7 from 48.0.
Furthermore, the US Manufacturing PMI data from Markit and ISM coupled with weekly jobless claims could make traders busy during the post-BOE trading hours.
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