Forex Today: Yen drops and pops on BOJ, N. Korea; eyes on Eurozone CPI, Brexit

Forex today in Friday’s Asian session was driven by mixed market sentiment, as the renewed US-China optimism was somewhat overshadowed by the North Korean news, citing that they are considering suspending nuclear talks with the US. However, the Asian equity markets advanced, led by the rally in the Chinese stocks amid upbeat remarks from China’s Premier Li. The risk currencies, the Antipodeans, also got a lift from the risk-on action in the equities, as the Aussie made another attempt to test the 0.71 handle. The Kiwi also followed suit and regained the 0.6850 barrier briefly. The USD/JPY pair, however, enjoyed good two-way business, having dropped to 111.50 on the North Korean news, but the BOJ’s tweaks to the Japanese economic assessment continued to weigh down on the JPY. Among the European currencies, the Cable wavered in a tight range above the 1.32 handle, awaiting a fresh direction amid looming Brexit uncertainty while the common currency held onto gains above the 1.1300 level amid broad-based US dollar weakness and weaker Treasury yields.

On the commodities front, both crude benchmarks consolidated near multi-month tops ahead of the US factories and rigs count data. Gold futures on Comex looked to stabilize just below the 1300 mark, with the bulls now eyeing a break above the 1311 levels for further a sustained move northwards.

Main Topics in Asia

BoC’s Wilkins makes no mention of need for future interest rate hikes

UK’s Cox to issue new legal advice on to break off Irish backstop – UK Telegraph

Japan Financial Minister Aso: If insist too much on achieving 2 pct inflation target, things could go wrong

BOC’s Wilkins: High debt levels could slow down the move to neutral

Gold Technical Analysis: Downside favored on bear flag breakdown, head-and-shoulders in the making

China, US made further substantive progress on trade talks – Xinhua

Critical incident: Shots fired at New Zealand mosque, multiple victims reported

China’s parliament approves new foreign investment law

BOJ leaves policy unadjusted, cuts exports and output assessment

BOJ tweaks assessment on economy

China’s Premier Li: US, China still in talks regarding trade conflicts

N. Korea considering suspending nuclear talks with US, Yen ticks higher

Gold seesaws as risk sentiment switches on and off

Key Focus Ahead

There is nothing of relevance for the EUR, GBP markets in the European session ahead, except for the Eurozone final CPI release due at 1000 GMT. However, the markets may eagerly await the BOJ Governor Kuroda’s press conference at 0630 GMT for fresh JPY trades. At 0700 GMT, the German WPI data will be published that is likely to have virtually no impact on the Euro.

In the NA session kicks-off with the Canadian manufacturing sales report at 1230 GMT, soon followed by the US industrial output and capacity utilization data at 1315 GMT. The US JOLTS job openings and UoM consumer sentiment releases will drop in at 1400 GMT. The oil traders will look forward to the US Baker Hughes oil rigs count data at 1700 GMT for further bullish moves.

EUR/USD: On a recovery mode towards 1.1345/50 ahead of Eurozone final CPI

Traders now await second-tier data from the Eurozone and the US that start with Final reading of February month Eurozone consumer price index (CPI). The Eurozone CPI may remain unchanged at 1.5% on YoY basis while likely confirming 1.0% Core CPI figure on a yearly basis.

GBP/USD may remain under pressure as 3-month Brexit extension does little to erase uncertainty

The three-month extension has done little to erase Brexit uncertainty. So,  GBP/USD  may remain under pressure will heading into the weekend. That said, the downside looks limited as well, as the worst scenario – a no-deal Brexit – has been rejected by MPs.  

The Many Lives of Brexit

The next week is indeed a historic one for the UK and the UK.   The PM plans to hold a “meaningful vote” on her withdrawal deal by next Wednesday.  If it does not pass the future relationship between the UK and the EU will immediately assume a very different shape.  

WTI Technical Analysis: Bulls in charge, eye 200-D SMA (62.00) while above 57.93 following third attempt breakout

Eyes are on highest levels since mid-November while above 57.93  – a horizontal and prior resistance line going back to mid-Nov 2018 which has given way on third attempt (bullish).