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Forex today remains largely in favor of risk aversion as the return of Japanese traders reacted over the Chinese requirement to have further talks before signing a trade deal with the US. Adding to the risk-off mood could be the Japanese Prime Minister Shinzo Abe’s statement that the recent typhoon in Eastern Japan will have prolonged economic impact. On the contrary, markets ignore better than forecast China CPI while also showing less reaction to the RBA minutes, not to mention Brexit positive headlines from the Daily Telegraph and the BBC. Additionally, investors largely ignored the surprise release of the US New York (NY) Empire State Manufacturing Index.

The US Dollar (USD) losses appeal against the traditional safe-havens like the Japanese Yen (JPY), Swiss Franc (CHF) and Gold. The same could also be attributed to the pullbacks of EUR/USD, GBP/USD and the NZD/USD pair. However, AUD/USD has to bear the burden of dovish RBA minutes and the pair’s nature of risk barometer. Further, Crude Oil also suffers from trade pessimism despite US-Turkey tension.

Main Topics in Asia

Japan govt says it will consider extra budget for typhoon relief – Reuters

EU mulls new emergency summit to ‘get Brexit deal done’ – BBC

BOJ: Will keep rates at very low levels at least through spring 2020

The RBA minutes: Board prepared to ease policy further if needed to support growth, jobs

US Defence Secretary Esper: Will be meeting with NATO allies next week”¦

Brexit: A Brexit deal appears to be taking shape – Telegraph

Key Focus Ahead

While trade/Brexit headlines will keep being the key drivers, the United Kingdom’s (UK) employment data and German ZEW Survey could entertain momentum traders. It should also be noted that comments from second-tier policymakers of the Bank of England (BOE) and the United States’ (US) Federal Reserve System (Fed) will join Swiss Producer and Import Prices to add the burden of the US and Canadian traders when they are back from Monday’s off.

EUR/USD registers an inside day ahead of German Zew survey

EUR/USD created an inside day or inside bar candlestick pattern on Monday, indicating investor indecision and impending  volatility.  A bullish close could be seen if the German Zew Survey blows past expectations.  

GBP/USD: Options market turns bullish on Sterling for first since January 2018

The options market has turned bullish on Sterling for the first time in nearly two years.  Investors are likely anticipating  a Brexit breakthrough and adding bets to position for a rally in Sterling.  

USD/JPY unchanged on 108 handle in Tokyo opening hour, eyes on key events

USD/JPY was  steady in Tokyo’s opening hour, weighing trade risks and upcoming events.   Looking ahead, eyes are  on US Industrial Production and Fed speakers.