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Forex today was a quiet Asian affair this Wednesday, as the Japanese and Chinese markets were closed in observance of May Day. Most majors stuck to thin trading ranges while the US dollar consolidated the downside across its main competitors amid moderate risk-on and ahead of the key US data and FOMC decision due later today.

Amongst the Asia-pac currencies, the AUD/USD pair popped to 0.7056 highs as another round of the US-China trade talks kick-off and refuel trade deal hopes. The Kiwi got sold-off into renewed RBNZ rate cut bets following New Zealand’s jobs data disappointment and weaker oil prices. At the press time, the NZD/USD pair moved-off lows, but traded weaker near 0.6650 levels. Meanwhile, the USD/JPY pair traded modestly flat near 111.50, despite higher S&P 500 futures, as thin volumes kept the investors on the edge.

Both the European currencies, the EUR and the pound, were better bid amid upbeat Euro area fundamentals and Brexit optimism. But the losses in gold prices suggest that the upside in EUR/USD could be limited. Gold prices on Comex headed back to 1280 levels, as attention turns towards the Fed outcome.

Main Topics in Asia

Venezuelan political crisis – Updates

US claims Russia talked Maduro out of leaving Venezuela – The Guardian / CNN

Maduro has “defeated” Guaidó and his supporters – The Guardian / AP

WTI below rising support line following API and Venezuela headlines

Venezuelan opposition leader Guaido: President Maduro does not have the support of the armed forces

US FAA: All US air operators in Venezuela asked to depart within 48 hours

Other Headlines

NZ Q1 Labour market statistics are out, not so good employment rate (NZD/USD lower on dovish RBNZ expectations)

Asia’s oil imports from Iran hit 8-month highs in March

So how are the Sino / U.S. trade talks going?

UK shop price inflation falls for first time since October – BRC survey

US Agriculture Sec Perdue: US may push for quick, narrow trade deal with Japan

US-Sino trade war clouds growth outlook for East Asia – AMRO think-tank

Gold dips below 100-HMA, focus on Fed

Key Focus Ahead

Thin volumes and minimal volatility is likely to extend into Europe, as most major European markets are observing a national holiday. Hence, the focus now remains on the UK manufacturing PMI release (at 0830 GMT) and Brexit-related updates for fresh trading impetus. Also, the speech by the ECB policymaker De Guindos will be eyed for fresh hints on the ECB interest rates outlook.

In contrast, the NA session will be eventful, with plenty of event risks from the US docket, including the US ADP jobs due at 1215 GMT, followed by the ISM and Markit manufacturing PMI reports slated for release around 1400 GMT. Ahead of that, the Canadian Markit manufacturing PMI will be reported at 1330 GMT. Also, the CAD and oil traders will eagerly await the release of the EIA weekly crude stocks data at 1430 GMT.

Despite the macro news, the FOMC monetary policy announcement will steal the limelight later today at 1800 GMT, which will be followed by the Fed Chair Powell’s press conference. Markets are widely expecting the Fed to keep the policy steady while maintaining the recent dovish bias, in light of trade concerns and US economic health woes. Any hawkish tweak to its monetary statement, the USD is likely to receive a fresh boost across its major rivals. Towards NY close, the speech by the BOC Governor Poloz will also remain in focus.

EUR/USD scales 10-day MA ahead of the Fed

The pair may challenge the 50-day moving average, currently at 1.1274, if the Fed sounds dovish.  Ahead of the Fed, the pair may take cues from ECB’s De Guindos speech and the US ISM manufacturing number.

GBP/USD clings to 1.3040 ahead of UK PMI, FOMC

In spite of registering heavy gains on Tuesday, the  GBP/USD  pair clings to 1.3040 while heading into the London open on Wednesday. Market turns cautious ahead of the key risk events like UK PMI and FOMC.

Fed Preview: The good, the bad, and the ugly factors that determine the dollar’s reaction

Traders are holding their breaths ahead of the primary event of the week: the Fed decision. Will the next move be up or down? The answer is critical for the US Dollar.  

US Manufacturing PMI, ADP Employment: A coin with two heads

The ISM manufacturing PMI is expected to slip to 55.0 in April from 55.3 in March.  The clients of ADP are projected to add 180,000 new positions in April.