Forex Today: Risk rallies on Trump-Xi trade truce, focus shifts to UK PMI, Brexit news

Forex today in Asia cheered the weekend’s trade armistice between the US and China after both the leaders agreed to a ceasefire for a period of 90 days, with China buying in more time to reach a lasting deal on trade with the US. The risk currencies and China proxies, such as the Antipodeans got a fresh boost at the expense of the safe-haven US dollar and the Yen. The Aussie gapped higher and reached three-month highs at 0.7380 while the Kiwi jumped to five-month tops of 0.6920. The USD/JPY pair also rallied to 113.82 before easing back towards 113.40 amid notable US dollar selling.

Among related markets, both crude benchmarks rallied over 5% while Treasury yields are also up nearly 1% across the curve. The Asian equity markets are also notable higher, backed by a 1.5% rise in S&P 500 futures. Despite risk-on, gold prices on Comex advanced 0.30% to 1230 levels.

Main Topics in Asia

China US Trade: Trump, Xi agree to a truce and further talks

UK manufacturers heading for sharp Brexit slowdown in 2019 – EEF

Gold: Picking up the pace in Tokyo, U.S. dollar on the backfoot

China Caixin manufacturing PMI showed new export orders extended decline in November

Alberta PM Notley: Alberta to cut crude production by 8.7%

Oil surges 4 percent after US, China agree trade war ceasefire

Moody’s: China’s economic growth to slow during 2019-2020 amid US-China trade tensions

UK’s May faces no-confidence vote if Parliament rejects Brexit deal – Bloomberg

US tariff hike to 25% on China will still occur in March or beyond – Goldman Sachs

Trump: “China has agreed to reduce and remove tariffs on cars coming into China from the US”

Shanghai Composite gaps higher, S&P 500 futures rise 1.5% on trade war ceasefire

Key Focus Ahead

The EUR calendar looks full and loaded on first trading day of this week, as markets gear up for a flurry of final manufacturing PMI reports from the Euro area. Also, in focus remains the UK manufacturing PMI release due at 0930 GMT. At the same time, the Eurozone Sentix investor confidence data for December will be published. Ahead of that, the Swiss retail sales and PMI data will be reported at 0815 GMT.

In the NA session, the Canadian Markit manufacturing PMI will drop in at 1430 GMT, followed by the US Markit manufacturing PMI at 1445 GMT and the key ISM manufacturing PMI will be released at 1500 GMT.

Apart from the macro data, we have the following central bankers lined up to deliver their speeches later today.

1530 GMT: FOMC member Brainard

1730 GMT: BOE Chief Economist Haldane

1800 GMT: FOMC member Kaplan

EUR/USD: Risk-on could pave way for a move above key hurdle of 1.1402

The EUR/USD pair was mildly bid in Asia and could soon scale the key resistance at  1.1402  if the Chinese Yuan (CNY) and the equities continue to cheer the US-China trade truce.

GBP/USD remains constrained below 1.2800 as Brexit angst begins to ramp up

It’s Markit PMI day on the  economic calendar, with the UK’s Manufacturing PMI on the docket for 09:30 GMT (forecast 51.5, previous 51.1), while the US side will also be seeing ISM Manufacturing PMIs at 15:00 GMT (forecast 57.8, last 57.7).

US Treasury Sec. Mnuchin to speak about US-China trade truce at 1300 GMT

The US Treasury Secretary Steven Mnuchin will appear on CNBC Squawk Box  later on Monday at 1300 GMT to discuss the US President Trump and China’s President Xi’s agreement on trade and tariffs at the G-20.  

GBP/USD Weekly Forecast: US Dollar weakness can save Sterling from testing new 2018 lows

The spotlight will be on Brexit headlines as the parliamentary debate on Brexit deal starts next Thursday, December 5 before voting on the deal on December 11.