Forex today in Asia kicked-off the month of August on a cautious note, as the US-China tensions got refueled after the Trump administration noted that they are weighing in a tariff hike on USD 200 billion worth of Chinese goods from 10% to 25%. The Chinese Yuan extended is losing streak, putting a bid under the US dollar versus its main peers. The Yen remained on the back foot following the BoJ’s adjustment to the ETF purchases a day before.
Meanwhile, both the Antipodeans were sold-off into weaker fundamentals and risk-averse market conditions. Downbeat Chinese Caixin manufacturing PMI further suggested to a slowdown in the Chinese economy while mixed New Zealand’s jobs report weighed down on the Kiwi. Also, weaker commodities’ prices collaborated to losses in the resource-linked currencies.
Main topics in Asia
Iran rejects US President Trump’s offer to hold talks – Reuters
As reported by Reuters, Iran has flatly rejected US President Trump’s offer for talks between the two countries.
New Zealand Unemployment Rate ticks higher, mixes with positive Employment figures
New Zealand’s Unemployment Rate ticked higher to 4.5%, missing expectations of a steady reading of 4.4%, while the Employment Change figure clocked in at 0.5%, beating the forecast 0.4% but still slipping back from the previous reading of 0.6%.
US administration pondering a tariff hike to 25% on Chinese goods – Bloomberg
As initially reported by Bloomberg, the US White House administration is considering raising planned tariffs on $200 billion worth of Chinese goods from 10% to 25% at the border “¦
NIESR: BoE should lift rates, but prepare for a reversal – Reuters
As reported by Reuters, the National Institute of Economic and Social Research (NIESR) is urging the Bank of England to lift rates this week, though a quick U-turn on rates can’t be ruled out in the near future.
China’s Caixin Manufacturing PMI eases to 50.8 in July, 8-month lows
China’s July Caixin manufacturing PMI came in at 50.8 vs. 50.8 expected and 51.0 last, with output and new business both expanding at softer rates.
USD/CNH rises as US considers more tariffs
The CNH is being offered at the time of writing on fears that the US may decide to further escalate its trade war with China.
Bank of Japan JGB buying plans for August
Earlier today, the Bank of Japan (BoJ) published their scheduled plan for Japanese Government Bond (JGB) purchases for the month of August.
Key Focus ahead
Today’s EUR macro calendar remains eventful, with a flurry of final manufacturing PMI reports due out from across the Euro area, starting 0715 GMT. The UK manufacturing PMI for the month of July will be released at 0830 GMT, which is expected to tick lower to 54.2 versus 54.4 last.
Moving on, the NA session also sees plenty of action while the FOMC rate decision is likely to emerge the main event risk. Markets are widely expecting the Fed to hold the Fed funds rate this month, although might deliver an upbeat statement on the economy and rate hike outlook.
Data-wise, the US ADP jobs report will be published ahead of the manufacturing PMI reports from both Markit and ISM that will drop in at 1400 GMT.
EUR/USD defends 20-month MA for the third consecutive month
The EUR/USD could rise if the Fed tempers hawkish tone. On the other hand, the pair may fall back to the key support of 20-month MA, currently located at 1.1623 if the central bank downplays trade war fears and retains hawkish rhetoric.
GBP/USD back into 1.31 ahead of the US Fed’s rate call as BoE Thursday looms
Before Thursday’s BoE showing, the upcoming US session for Wednesday will be dropping an FOMC Policy Statement and Fed rate decision, leaving broader market bias firmly in the hands of Greenback traders once again.
USD/CNY Technical Analysis: Drops below 6.80, bearish RSI divergence calls for a deeper pullback
The USD/CNY pair fell below 6.80 and could suffer deeper losses, courtesy of the large bearish relative strength index (RSI) divergence seen in the daily chart.
FOMC is set to leave rates unchanged – Goldman Sachs
In the view of analysts at Goldman Sachs, the Federal Reserve (Fed) is expected to keep the rates on hold this month, although could deliver an upbeat statement on the rate hike outlook.
How to trade the US ADP Non-Farm Payrolls with EUR/USD
The ADP NFP is a significant market mover as it serves. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
How to trade the US ISM Manufacturing PMI with EUR/USD
The ISM Manufacturing PMI provides guidance towards the NFP and moves markets. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
BOE to raise policy rates by 25bps – Barclays
Analysts at Barclays believe that the Bank of England (BOE) will raise the benchmark interest rates by 25bps when it meets tomorrow at its monetary policy meeting.
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