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  • The lack of trade/Brexit headlines, a light economic calendar keep markets mostly inactive.
  • Headlines from Asia seem largely ignored, Oil fails to hold on to recovery gains.
  • Active economic calendar during Europe/US to entertain traders.

Following a day filled with optimism surrounding Brexit/Trade, Forex today witnesses a lack of catalysts, which in turn reflects from the market behavior ahead of the European open on Thursday.

Except for the rising speculations of early elections in the United Kingdom (UK), fewer headlines concerning either the Brexit or the US-China trade deal crossed wires. On the contrary, calls of weaker growth at Singapore and South Korea, together with Australia’s inability to sell debt, were largely talked but not traded. Further, the meeting between Japanese Prime Minister (PM) Shinzo Abe and South Korea’s President Lee attempts to placate recently sour relations between them while also agreeing to cooperate on the North Korean issue.

On the economic calendar, Purchasing Manager Indices (PMIs) from Australia and Japan fail to produce major impact ahead of the active economic calendar to be ruled by the European Central Bank (ECB) meeting.

With this, the risk-tone remains mostly unchanged with Asian equities flashing mixed signals. The US Dollar (USD) recovers some of its latest losses while the Euro (EUR) stays positive. Moving on, Antipodeans witness extended profit-booking, though with a thin activity, whereas gold and the Japanese Yen (JPY) stand modestly changed. Furthermore, Oil prices had to forgo gains earned through surprise declines in inventory data whereas the British Pound (GBP) awaits the European Union’s (EU) response to the request concerning Brexit extension.

Main Topics in Asia

Moody’s affirms Japan’s A1 rating, stable outlook

Japan Jibun Bank Manufacturing PMI hits lowest since June 2016

UK’s Javid: Budget will go ahead on November 6, government still aiming for Halloween Brexit deadline – ITV

North Korea: Leader Kim and US President Trump continue to have close relations – KCNA

Boris Johnson faces growing Tory revolt over threat to hold General Election before Brexit – The Sun

Key Focus Ahead

While Japan’s Leading Economic Index and Coincident Index for August will set the tone for the busy calendar, Eurozone and German PMIs will entertain traders afterward. Also up in the data line will be the United States’ (US) PMIs, Durable Goods Orders and New Home Sales. Though, major attention is likely to be given to the European Central Bank (ECB) Monetary policy meeting as it will be the last time Mario Draghi will speak as the President.

On the news front, the US-China are nearing a trade deal but no major catalysts can be found ahead of the next month’s meeting. Elsewhere, the UK PM’s threat to call fresh election should be taken with a pinch of salt considering various Ifs and buts on the British political line.

EUR/USD: Probing 100-hour MA ahead of the ECB

EUR/USD is looking to break above the 100-hour MA resistance at press time.  The ECB is expected to keep rates unchanged at -0.5%.  President Draghi will likely justify September’s stimulus package, sending the EUR lower.  The downside looks limited as ECB’s stimulus has been priced in.  

GBP/USD in stasis as PM Johnson waits for EU decision

With Brexit in limbo, GBP/USD is lacking a clear directional bias.  Britain would need fresh elections if the EU grants a three-month extension, as requested.  

Gold drops to $1,491 despite downbeat catalysts from Asia, Brexit uncertainty

Gold ignores economic warnings from Australia, South Korea, and Japan. Doubts over Brexit prevail, a lack of headlines concerning the US-China trade deal. An active economic calendar, including ECB, will be the key.

USD/JPY declines to 108.60 amid fresh risk aversion, all eyes on the ECB

USD/JPY pulls back as downbeat Brexit headlines renew risk-off. Risk tone keeps the pair in the short range since the middle of the month. A heavy economic calendar could compensate for the lack of trade/Brexit news.