Renewed US dollar weakness across the board was the main underlying theme in Asia on the final trading day of this week, as markets looked to unwind following busy sessions filled with key central banks’ events and macro data. Meanwhile, markets cheered fresh optimism surrounding the Brexit and trade developments. However, escalating Mid-East tensions kept the upbeat mood in check. The Asian stocks posted small gains in tandem with the US futures while Treasury yields witnessed a pull back the helped gold prices to cling onto the recovery gains above $ 1500 mark.
Amongst the G10 currencies, the Antipodeans continued to suffer amid dovish central banks’ expectations, as the AUD/USD pair refreshed two-week tops and battled the 0.6800 level. The Kiwi extended the downside below the 0.62 handle. The Yen, on the other hand, benefited from the cautious optimism and upbeat Japanese CPI figures, as USD/JPY dropped to near 107.80 region. USD/CAD traded flat above the 1.3250 level, as Saudi’s military response-led rise in oil prices offered a little boost to the resource-lined Loonie.
Meanwhile, the EUR/USD pair regained the 1.1050 barrier while Cable continued to enjoy the Brexit optimism-sparked upbeat momentum near two-month tops.
Main Topics in Asia
US Agri. Sec. Perdue: Chinese officials to visit US farmland as trade talks continue – Reuters
German Finance Ministry: Weak global economy and economic uncertainties are slowing German economy
Saudi-led coalition launches military operation in Yemen – Saudi State TV
Japanese CPI: Up 0.3% over the year before seasonal adjustment
White House Trade Advisor Navarro: Fed costing US a full point of GDP growth
Ex-IMF chief Christine Lagarde says global growth ‘fragile,’ ‘under threat’ – RTRS citing AFP
PBOC lowers one-year lending rate to 4.20% vs. 4.25% previous
BOJ cuts key 5-10 Year bond purchases third time in six weeks
Japan’s Motegi: Will meet with Iran’s ForeignMin at UNGA, seek to ease Mid-East tensions
Govt Sources: India likely to unveil measures to boost growth, Rupee tests 71.00 vs. USD
Japan’s Sugawara: Will hold bilateral talks with S. Korea, Won hits 2-day highs
Key Focus Ahead
The EUR macro calendar for today is a thin-showing, with the German Producer Price Index (PPI) and Bank of England (BOE) quarterly bulletin of note. And therefore, the Brexit negotiations between the UK Brexit Secretary Barclay and the European Union (EU) Chief Brexit Negotiator Barnier will hog the limelight.
In the NA session, the Canadian Retail Sales data (due at 1230 GMT) and Eurozone Consumer Confidence data at 1400 GMT will be closely eyed amid a slew of speech from the US Federal Reserve (Fed) officials and ahead of the Baker Hughes US Oil Rigs Count data.
1215 GMT: Fed’s Williams
1520 GMT: Fed’s Rosengren
1700 GMT: Fed’s Kaplan
EUR/USD’s range play continues ahead of Eurozone Consumer Confidence
EUR/USD remains directionless despite the drop in the US treasury yields. An above-forecast Eurozone Consumer Confidence will likely push the pair higher to the trendline falling from June highs.
GBP/USD sits at 2-month tops ahead of key Brexit talks
Fresh optimism surrounding the Brexit deal propels GBP/USD to a two-month high. Brexit talks between the EU’s chief negotiator Michel Barnier and UK Brexit Secretary Stephen Barclay will be the key.
Canada: Retail Sales to tick higher in July – Scotiabank
Analysts at Scotiabank offer a brief preview on what to expect from Friday’s Canadian Retail Sales data that will drop in at 1230 GMT.
Markets unmoved by Fed cut and pause
The Federal Reserve’s latest twist in monetary policy, reducing the fed funds for a second time in two months and then pausing for instructions has left markets without a clear direction on interest rates.