Forex today experienced a sense of caution in Asia this Monday, as Sunday’s dismal Chinese trade data combined with looming US Dec. 15 tariffs overshadowed the latest trade optimism. The US dollar held onto the upbeat US payrolls induced gains vs. most majors, although the further upside lacked follow-through amid a retreat in the US Treasury yields. Meanwhile, gold prices were sidelined around 1460 levels following Friday’s sharp decline.
On the G10 fx space, the Antipodeans traded on the back foot on China’s exports drop, with Aussie pressured below 0.6850 while the Kiwi was offered around the midpoint of the 0.65 handle. The pullback in oil prices after the OPEC+ decision led gains also kept the commodity-currencies, including the Canadian dollar, in the red. USD/CAD traded +0.10% higher around 1.3260 region.
Meanwhile, USD/JPY corrected from near 108.70 levels and returned to the 108.50 support area, as the yen was underpinned by upbeat Japanese Q3 GDP data and tepid risk sentiment. Amongst the European currencies, both EUR/USD and GBP/USD attempted a minor bounce, with Cable buoyed by favorable UK election polls.
Main Topics in Asia
China’s trade surplus narrowed to $38.73 billion in November amid sharp drop in exports
China’s exports to US dropped 23% in November
UK election polls: Tories maintain lead over Labour into final days
Beijing orders state offices to replace foreign PCs and software – FT
Mexican Foreign Minister: Mexico will not accept US labour inspections in USMCA trade pact
Japanese GDP Q3 beats expectations by 0.2%
Big FX platforms see e-trading volumes drop over past three years – BIS
S. Korea’s Vice FinMin: Will act swiftly if volatility in financial market rises
Governor of China’s Xinjiang expresses strong condemnation of US bill
Sources: US, Canada and Mexico are edging closer to USMCA trade deal – WSJ
Moody’s: 2020 outlook for APAC banks is negative
PBOC Adviser Liu: China’s potential growth below 6% over next five years
Key Focus Ahead
It’s a quiet start to an eventful week ahead, with the main events to watch out for include the UK election, FOMC and ECB monetary policy decisions. These event risks will offer fresh direction to the majors in the coming weeks.
In the meantime, the focus stays on the Swiss Unemployment Rate and German Trade numbers due shortly at 0645 GMT and 0700 GMT. In the European session, the Eurozone Sentix Investor Confidence, at 0930 GMT, will be eyed for fresh EUR trades, especially after Friday’s sluggish German industrial data.
In the NA session, the Canadian Housing data will somewhat make up for a quite US docket, which will pick up the pace by mid-week. Markets will continue to pay close attention to the US-China trade developments.
EUR/USD looks heavy after Friday’s bearish outside day
EUR/USD risks reporting losses on Monday, having charted a bearish outside day candlestick pattern on Friday. The dollar will likely remain bid with markets no longer expecting the Fed to cut rates before the November 2020 Presidential Elections.
GBP/USD recovers Friday’s losses to 1.3150 as Tories top UK election poll
GBP/USD keeps the recovery mode intact near 1.3150 while heading into the London open on Monday. The spot seems to cheer the Tory lead in all the polls for this week’s UK election. The latest USD gains seem checked as markets enter the key week, risk tone compresses.
Gold: Long-term potential remains strong
Long-term bullish continuation anticipated once current correction is completed. Looks like a deeper retracement may come in the near-term, before resumption of the rally.
The week ahead: ECB, FED and UK elections take market’s focus
The week ahead brings three major events in the Fed, ECB and UK elections. Markets expect a steady hand from a data-dependent Fed with rate cuts expected for first half of 2020.