FX Today: Kiwi sold-off into RBNZ rate cut hints; German IFO, trade talks eyed

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Forex today stuck to tight trading ranges in Asia on the final trading of this week, except for the Kiwi, as markets remained in a wait and see mode awaiting the outcome of the crucial US-China trade talks. Meanwhile, the NZD/USD pair witnessed a sharp 50-pips sell-off and tested weekly lows near 0.6760 levels after the rate cut talks from the RBNZ Deputy Governor Bascand weighed heavily on the domestic currency.

The Aussie, on the other hand, managed to regain the bids and held near the 0.71 handle amid trade deal hopes while the USD/JPY pair tried to take out 110.85 barrier, having found buyers again near 110.60 levels, despite moderate risk-off action in the Asian equities. The risk sentiment remained sour as weakening global outlook somewhat offset the optimism over trade progress.

On the commodities front, both crude benchmarks traded little changed while gold prices on Comex bounced off a dip to 1324 levels although the recovery remained capped below the 1330 barrier.

Main Topics in Asia

RBA Governor Lowe’s speech

Central scenario is 3% GDP growth this year

Rate outlook more evenly balanced, hike next year may be appropriate

Labor market likely lagging previous strong GDP

Other Headlines

Japan’s Aso: Trump has not mentioned currencies when discussing trade issues with Japan

USD/CNH Technical Analysis: Doji suggests temporary low in place

US bets on China’s special envoy in trade talks – WSJ

Trump: US economy is stronger than it’s ever been before

US-China trade talks said to be positive – CNBC

Australian PM Morrison denies souring of relationship with China

RBNZ: Rise in bank capital could lead to eventual rate cut, Kiwi drops 50-pips

Gold Technical Analysis: Bouncing off 200-hour MA

BoJ’s Kuroda: There are some risks to the economic outlook, including trade protectionism

Australian TradeMin Birmingham believes China has applied restrictions to all coal exporters

Key Focus Ahead

Friday’s EUR macro calendar is a busy affair, kicking-off with the German Q4 final GDP figures at 0700 GMT, soon followed by the Swiss Q4 industrial and construction production data. The main headline for this session is likely to be the German IFO business climate survey for the current month that will drop in at 0930 GMT. At 1000 GMT, the Eurozone final CPI readings will be published that are likely to confirm the flash reports. The UK docket has no first-tier economic releases and hence, the UK traders will keep an eye on the Brexit-related developments and CBI Distributive Trades survey due at 1100 GMT.

The NA session is relatively data-light, with nothing out of the US while Canada sees the key retail sales release at 1330 GMT.  Also, of note remains the Baker Hughes US oil rig count data slated for release at 1800 GMT. Meanwhile, markets eagerly look forward to the outcome on US-China trade front, as the US President Trump is scheduled to meet with the Chinese Vice Premier Liu He at the White House later in the day.             

Besides, a bevy of global central bankers will be seen making appearances in the American session.

1515 GMT: Fed’s Williams

1530 GMT: ECB President Draghi

1700 GMT: Fed’s Clarida

1830 GMT: Fed’s Quarles and Bullard

EUR/USD’s revival has a new target, focus on German data and Draghi speech

The German GDP, scheduled for release at 07:00 GMT, is expected to show the growth rate stalled in the fourth quarter. The EUR could also take cues from the forward-looking German IFO readings, due at 09:00 GMT.

GBP/USD stuck around 1.3030, trade and Brexit details awaited

Looking forward, the UK PM May will be meeting a few other EU leaders over the weekend in order to provide last ditched efforts to secure a Brexit deal that can be passed through parliament.

US Dollar: Looking for the next trend

The evolution of Fed policy, the US-China dispute, Brexit and the expansion of the American economy may again provide solid reasons for buying the dollar.  It depends on how these issues play out.

White House: Trump to meet Chinese Vice Premier Liu He on Friday – Reuters

The White House made an announcement late-Thursday, citing that the US President Donald Trump will meet with the Chinese Vice Premier Liu He at the White House on Friday, Reuters reports.

 

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