The market mood remained fragile in Asia, as the dust settled over the hawkish Fed rate cut, with Asian stocks mostly mixed while US equity futures and Treasury yields turned south. The US dollar was dragged broadly lower, as a result, and offered some lift to the Euro, GBP and Gold.
Meanwhile, the Antipodeans remained heavily offered amid increased calls for central banks’ easing, especially after New Zealand’s GDP growth slowed in Q2 and the Australian jobless rate ticked higher to yearly highs. The AUD/USD pair hit two-week lows sub-0.68 while the Kiwi briefly dipped below the 0.63 handle.
The USD/JPY pair corrected sharply from Fed-led highs and lost the 108 handle after the Bank of Japan (BOJ) refrained from further easing, as widely expected, and boosted the Yen. Therefore, the AUD/JPY cross emerged the biggest loser in Asia while USD/CAD traded with mild losses amid muted oil price-action. The Swiss Franc traded better bid vs. the greenback ahead of the key Swiss National Bank (SNB) rate decision.
Main Topics in Asia
Brazil’s central bank cuts benchmark lending rate by 50 basis points to 5.50%
DUP’s Foster signal party’s shift on Northern Ireland border issue – The Guardian
US Sec. of State Pompeo: US stands with Saudi Arabia and supports its right to defend
New Zealand GDP beats expectation for both QoQ and YoY
Trump on Federal Reserve: Today’s action is fine
German Finance Minister: A no-deal Brexit would not be good
USD/IDR stays below 50-DMA ahead of Bank Indonesia rate decision
Short-term agreement reached to avert US government shutdown – Bloomberg
Australian Employment Change in at 34.7K vs 10.0K expected
BOJ keeps policy steady
BOJ: Won’t hesitate to ease if there is risk economy could lose momentum to hit price goal
UK has two weeks to set out Brexit plan – Finnish PM
Overnight offshore Yuan HIBOR hits lowest since January 2019
Japan’s Nishimura: Will support small businesses, farms if needed in light of US-Japan trade talks
Key Focus Ahead
Markets gear up for a “Super Thursday”, as the UK Retail Sales and the Bank of England’s (BOE) monetary policy decision accompanied by its minutes will headline in the European session ahead. The UK Retail spending data will be released at 0830 GMT ahead of the BOE event at 1100 GMT. The BOE is expected to stand pat on its monetary policy, but the focus will be on the bank’s growth outlook and next policy move, in light of increasing Brexit uncertainties.
Also, of note remains the Swiss National Bank’s (SNB) quarterly monetary policy assessment and Indonesia’s rate decision, both dropping in at 0730 GMT. Ahead of these central banks’ events, the Swiss trade data and BOJ Governor Kuroda post-monetary policy press conference will be eyed in early trading.
Meanwhile, in the NA session, a fresh batch of US economic data will be released, including the weekly Jobless Claims, Philly Fed Manufacturing Index and Existing Homes Sales. Also, the Canadian ADP jobs change data will be watched for fresh impetus on the CAD.
Markets will also pay close attention to any fresh developments surrounding the Mid-East conflict, Brexit and US-China trade issue.
EUR/USD remains stuck in a narrowing price range after Fed
EUR/USD’s struggle for strong directional bias continues after hawkish Federal Reserve (Fed) rate cut. The risks in EUR/USD looks skewed to the downside ahead of Eurozone data and ECB-speak.
GBP/USD remains below 100-day SMA on “Super Thursday”
With the mixed Brexit headlines and the US Dollar (USD) pullback playing contrasting tunes, the GBP/USD pair remains under 100-day SMA ahead of the London open on Thursday. All eyes on UK Retail Sales, BOE decision.
BOE Preview: Will Carney drop the hawkish bias? Brexit is not the reason and GBP/USD may fall
The BOE is set to leave interest rates and its guidance unchanged. Rising Brexit uncertainty is paralyzing policymaking. If Governor Carney drops the bank’s hawkish bias, GBP/USD may drop.
Gold technical analysis: Indecisive market, focus on today’s close
Gold created a candle with long upper wicks on Wednesday, signaling indecision in the market. The next move depends on the follow-through – today’s close is pivotal.
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