Amid an eventless Asia session this Tuesday, the pound rallied on the reports that the UK PM May is considering a plan to delay Brexit. The Cable jumped nearly 60 pips and regained the 1.3150 barrier briefly on the Brexit headlines before retreating slightly to near 1.3130 region. Meanwhile, the other risk currencies, the Antipodeans, kept losses amid negative sentiment on the Asian stock markets while the Yen picked up a bid on reports of escalating Indo-Pak tensions. The USD/JPY pair quickly reversed from tops above the 111 handle and hit daily lows near 110.75. The Aussie also reverted to daily lows near 0.7150, having failed once again near 0.7170 region.
Amongst the commodities, both crude benchmarks kept its downside bias, as Trump’s tweet to OPEC continued to weigh while gold prices on Comex traded little changed near 1330 levels, unfazed by the risk-off trades.
Main Topics in Asia
UK PM May reported to be considering plan to postpone Brexit
Fed’s Clarida says the economy is in a good spot, can afford to be patient
BOJ’s Kuroda: China’s economy slowing quite significantly
UK planning to pay billions to Brussels even in event of no-deal Brexit – Telegraph
WTI Technical Analysis: $53.90 grabs seller’s attention
RBNZ’s Bascand: Bank’s plan on bank capital could lower govt borrowing costs
China’s NDRC: Infrastructure investment growth still under pressure
Gold Technical Analysis: 200-hour MA is again capping downside
USD/INR gaps higher on Indo-Pak tensions
Asian stocks retreat from five-month highs
Key Focus Ahead
Markets buckle up for the Bank of England (BOE) quarterly inflation report hearings due at 1000 GMT for fresh momentum on the pound as they await the UK PM Theresa May’s speech around 1400 GMT. In terms of the macro news, today’s EUR calendar offers no first tier releases, but the German Gfk consumer sentiment will be eyed at 0700 GMT, followed by the UK BBA mortgage approvals data due at 0930 GMT.
In the NA session, a fresh batch of US housing data will released at 1330 GMT ahead of the Fed Chair Powell’s testimony on the semi-annual monetary policy report before the before the Senate Banking Committee at 1445 GMT. No new surprises are expected from Powell’s testimony, although any hints on the balance sheet normalization and/or on the rate hike outlook will have a major impact on the US currency. Next of relevance remains the US consumer confidence numbers that will drop in at 1500 GMT among other minority reports. Later towards NY closing, the API weekly crude stocks data will be reported at 2130 GMT, soon to be followed by New Zealand’s trade balance data at 2145 GMT.
EUR/USD: Probing key resistance at 1.1370, focus on Powell’s testimony
EUR/USD may rise well above 1.14 if Powell talks dovish during his testimony despite the recent optimism on trade. It is worth noting that a big move is overdue, as four months of range bound action has pushed implied volatility readings down to levels seen in November 2017.
GBP/USD: Bulls cherish 4-week high ahead of an eventful day
Looking forward, the inflation report hearings by the Bank of England (BoE) Governor Mark Carney and few monetary policy committee (MPC) members will be the first catalyst to observe at 10:00 GMT.
3 Currencies to Buy on Fed Powell’s Testimony
Fed Chairman Powell is headed to Capitol Hill to testify before Congress. His prepared comments on the economy and monetary policy will be released at 9:45AM NY / 14:45 GMT and they should drive EUR/USD, AUD/USD and NZD/USD higher.
Conference Board Consumer Confidence Preview: The consumer stays bid
The Consumer Confidence Index from the non-profit business membership and research group the Conference Board is expected to rise to 124.7 in February from 120.2 in January.
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