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The risk-on sentiment was the key underlying theme in Asia this Wednesday, as the Asian stocks staged a bounce amid a potential US-China trade war truce while markets ignored sluggish Chinese manufacturing PMI report.

Amongst the Asia-pac currencies, the Aussie was the weakest on the back of softer Australian CPI figures and disappointing Chinese PMI, but the losses remained capped near 0.7070 amid better risk appetite. The Kiwi also tracked its OZ neighbor lower, trading just below the 0.6550 barrier. Meanwhile, the USD/JPY held gains near 3-weeks tops, with the Yen on the back foot following the BoJ’s downward revisions to its inflation and growth forecasts. The BoJ kept its monetary policy settings unchanged at its October monetary policy meeting held earlier today.

Across the commodities space, gold prices on Comex traded weaker below the 1220 level while oil prices advanced, with WTI circling around the USD 66.50 region.  Copper prices on Comex drop 2.50% to trade near USD 2.670 level amid China slowdown fears.

Main Topics in Asia

Ex-Fed’s Yellen: 2019 US growth could be bit slower but still above trend

Australian inflation mostly comes in as expected, but headline CPI declines to 1.8%

China manufacturing PMI fell to 50.2 in October

Japan’s industrial output declines as trade war weighs – Reuters

Asian stocks eke out small gains, Shanghai Composite charting a bull continuation pattern

BoJ keeps policy unchanged, as widely expected

BoJ makes downward revisions to the Japanese growth and inflation forecasts

BoJ: Economy’s momentum for hitting price goal sustained a lacking strength

Key Focus Ahead

Markets gear up for another eventful EUR calendar, with the BoJ post-monetary policy press conference likely to be held by Governor Kuroda around 0630 GMT. The second-liner German retail sales data will soon follow at 0700 GMT. At 0900 GMT, the Swiss ZEW expectations Survey for October will be released that will offer some impetus to the Swissy. The main event risk for the EU session remains the Eurozone flash CPI estimate, which is likely to show that the bloc’s consumer prices accelerated to 2.2% y/y this month.  Meanwhile, a slew of ECB-speaks is due on the cards around 0900 GMT.

Moving on, the US ADP jobs report will be published at 1215 GMT, a precursor to the key US payrolls data due this Friday. Also, the US employment cost index data will be eyed at 1230 GMT for fresh hints on the upcoming US wages report. The CAD traders eagerly await the Canadian GDP report due at 1230 GMT among other minority reports and ahead of the US EIA crude stocks data and BOC Governor Poloz’s speech scheduled at 2015 GMT. Also, of note remains the SNB Chairman Jordan’s speech titled “Protectionism makes monetary policy difficult” at the Bern Economic Society at 1715 GMT.

EUR/USD: Teasing a bearish close below the 50-month SMA

The bearish case may strengthen further if the US employment cost index beats estimates, signaling a pick-up in wage-price inflation. An above-forecast  Eurozone  CPI may offer some relief, however, for the EUR to find bids, the US employment cost index needs to miss estimates by a big margin.

GBP/USD: Brexit still leading GBP bulls by the nosering, down to 1.2700

Wednesday sees Sterling’s  economic calendar  data-free, and the London market session will see investors facing down continued Brexit headlines that showcase the still-vast distance between the two sides of the EU-UK negotiations.  

ADP employment preview: Strong job creation forecast to continue

The ADP release is  forecast  to report that US firms using its payroll services added 189,000 new positions in October following 230,000 new jobs in September and 163,000 in August.    

Gold Technical Analysis: Consolidation likely ahead of US employment cost data

Gold is looking oversold as per the hourly chart relative strength index (RSI). Notably, a bullish RSI divergence would be confirmed if the current or the next hourly candle report gains, without printing lows below the session low of $1,215.

Will the Bank of England Stop GBP Decline?

It’s time to turn your focus to the British pound because  tomorrow, the Bank of England will release its Quarterly Inflation Report in conjunction with a monetary policy announcement.