Search ForexCrunch

Forex today in Wednesday’s Asian trading was mainly dominated by broad-based US dollar recovery, stemming mainly from mild risk-aversion amid renewed US-China trade woes and the latest reports on North Korea’s nuke testing.

Among other news, China Is expected to cut the RRR next quarter that lent some support to the Aussie bulls and pushed the AUD/USD pair to 0.7075 levels. But the bulls struggled near the last amid fading US-China trade optimism and a +4% drop in Dalian iron-ore futures. The Kiwi emerged the weakest, down -0.30% near 0.6830 levels, as oil prices corrected lower and markets remained wary ahead of New Zealand’s Q4 GDP release. The USD/JPY recovery stalled near 111.70 region, as the safe-haven Yen found some footing on the back of a retreat in the Asian equities amid pre-Fed caution trading.  

Among the European currencies, the Euro traded little changed near the 1.1350 level, with the bias leaning to the downside while the Cable traded on the back foot amid looming Brexit uncertainty, as the focus shifts to the UK inflation report for fresh trading impetus.

Main Topics in Asia

NZ: Q4 current account deficit widens to 3.7% of GDP – Westpac

RBA’s Bullock: Household debt well secured against property

RBA’s Bullock: Encouraging lenders not to tighten too much

BoJ Minutes 23-24 Jan meeting: Appropriate to continue easing persistently

China will sign agreements with France during Xi’s visit

NZD bullish: BNZ hike their milk price forecast as world economic risks recede from highs

China may cut reserve ratio in Q2 – China Securities Journal

Gold Technical Analysis: Pullback from 50% Fibo highlights 2-week old support line near $1300

High-level US-China trade talks to resume in final push for deal – WSJ

BOJ’s Wakatabe: Japan is making progress towards fiscal health

USD/INR Technical Analysis: Bull outside-day invalidates immediate bearish setup

Brent Oil: Pullback from 4-month highs stalls at 50-hour MA support

JPY bullish: N. Korea’s Kim could announce suspension on nuclear testing today – Chosun

Shanghai Composite dips despite golden cross, Asian stocks retreat ahead of Fed

Key Focus Ahead

Markets gear up for a busy EUR session ahead, kicking-off with the German PPI data at 0700 GMT that will be soon followed by the ECB non-monetary policy meeting at 0800 GMT. The main highlight for the EUR calendar today is the UK inflation data due at 0930 GMT. The UK CPI is likely to stagnate at 1.8% in the month of February. Also, the UK PPI and retail price index will be reported parallely. At 1400 GMT, the Swiss National Bank (SNB) Q1 quarterly bulletin will be released ahead of the central bank’s quarterly monetary assessment due tomorrow.

Later in the NA session, all eyes remain on the FOMC monetary policy decision, as markets eye the Fed’s outlook on the interest rates for this year and the economic projections. The speech by the Fed Chair Powell will also remain the key event risk. Next of relevance remains New Zealand’s Q4 GDP report slated for release at 2145 GMT.

EUR/USD: In stasis near key descending trendline hurdle, focus on Fed

EUR/USD  is consolidating near the resistance of the trendline connecting Jan. 31 and Feb. 28 highs pre-Fed and could rise well above 1.14 if the central bank sounds more dovish-than-expected.  

GBP/USD: Pressure builds around 1.3250, UK CPI, FOMC in spotlight

Investors remained cautious during early-day as they await key data/events from the UK and the US. Among them, British CPI will be the first to be released at 09:30 GMT followed by the monetary policy meeting result from the US Federal Reserve at 18:00 GMT.

UK: Headline CPI to inch higher to 2.0% y/y – Barclays

The Barclays Research Team offers a brief preview of their expectations from Wednesday’s UK inflation data due on the cards at 0930 GMT.

3 Things to Watch for From the Fed

Wednesday’s Federal Reserve monetary policy announcement is the most important event risk this week.  The most telling part of the FOMC rate decision will be the dot plot forecast.  

New Zealand GDP preview: moderate impact ahead or RBNZ

Growth for the three months to December is forecasted at 0.6% vs. the previous 0.3%, while the annual reading is foreseen at 2.5% from 2.6% in Q3.