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The optimism over the US tariffs delay on the Chinese goods faded in the Asian trading this Wednesday, as mounting concerns over the Hong Kong political risks and a big miss on the Chinese activity numbers kept the risk sentiment somewhat frag. The safe-haven Yen was the biggest gainer, with USD/JPY downed to 106.25 levels before recovering above the 106.50 region towards Asia closing amid a pullback in the US equity futures and Treasury yields.

The Aussie continued to trade on the back foot below the 0.68 handle, having failed to survive multiple attempts above the last. The Kiwi traded better bid near 0.6460 region despite the drop in oil prices. Both the EUR/USD pair and Cable traded little changed and held the recent lower ground amid a broad-based US dollar upside consolidation.

Meanwhile, the Asian currencies, such as the Yen, the CNY and Indian Rupee, gained amid a slightly stronger Yuan fix. Gold prices, on the other hand, traded muted around 1500 levels, awaiting fresh trade/ political headlines for the next direction.

Main Topics in Asia

UK’s Hammond accuses PM Johnson of ruining any chance of a deal with the EU – The Sun

US treasury yield curve flattest since 2007

PBOC sets Yuan reference rate at 7.0312

US tariffs delay mainly due to concerns over political risks, US equity market’s performance – Goldman Sachs

China’s July data dump: Downbeat across all indicators

China 10-year bond yield drops below 3% for first since December 2016

China’s NBS: Impact from Sino-US trade war on China’s economy controllable

China’s FinMin: Further cut government spending and ensure tax cuts

Gold seesaws around $1500 as markets move away from risk-ons

China denied a US Navy request to make scheduled port visits to Hong Kong

China’s Hong Kong Affairs office: Strongly condemn ‘near-terrorism’ criminal actions in Hong Kong

Sources: China is sticking to September US trade talks after tariff delay – Bloomberg

Key Focus Ahead

Another data-busy European calendar keeps markets prepared for some action, as the German Q2 Preliminary GDP data will be released at 0600 GMT, followed by the UK CPI report at 0830 GMT and the Eurozone Q2 Preliminary GDP, industrial output and jobs data, all of which will be published at once at 0900 GMT. Also, in focus, remains the speech by the Reserve Bank of Australia (RBA) Assistant Governor Debelle, which could have a significant impact on the Aussie trades.

The US docket remains relatively lighter, with the only Import and Export Price Index  on the cards at 1230 GMT. The Energy Information Administration (EIA) weekly Crude Stocks data will also grab some attention amid fresh US-China trade news, UK political developments and the US President Trump’s comments.

When is German GDP data and how could it affect EUR/USD?

With the forward-looking  indicators  painting a gloomy picture due to the recent escalation of trade tension, the path of least resistance for the EUR appears to be on the downside. A negative GDP print won’t be a surprise but may end up strengthening the bearish pressures around the EUR.

GBP/USD holds steady around latest lows, awaits UK CPI for fresh direction

GBP/USD struggles to justify downside pressure amid political uncertainty as traders await inflation data for fresh impulse. The US Dollar seesaws due to the shift in market sentiment. Looking forward, the July month UK CPI will be the key for the Cable traders to watch out for.

UK  inflation preview: Did the pound’s fall lift prices? Three scenarios for GBP/USD

UK inflation has likely remained close to the BOE’s 2% target in July.  Sterling’s recent slump will likely push future prices higher. GBP/USD may ignore any surprising rise amid Brexit concerns.

WTI: Nearing 200-day MA support, channel breakout remains elusive

WTI oil is feeling the pull of gravity at press time, having failed to close above the falling channel resistance on Tuesday. On the daily  chart, WTI is trapped in a falling channel. A bearish channel breakout, if confirmed, would create room for a rally to $60.00.