FX Today: Risk-on at full steam amid US-China trade deal talks, UK PMI, US wages in focus

The latest reports on the US-China trade resolution bolstered the appetite for the risk assets in the Asian session on the final trading day of the week, sending the Asian equities through the roof and the US dollar broadly lower. As a result, FX today cheered the risk-on market action, with the Aussie jolting back to the 0.7250 level while the Kiwi bounces sharply to test the 0.67 handle. The safe-haven Yen, on the other hand, ran through fresh offers that pushed the USD/JPY back onto the 113 handle while the Treasury yields picked up bids, rallying nearly 1% across the curve. Meanwhile, the pound and the EUR consolidated yesterday’s rally, as markets look forward to fresh Brexit-related developments and the key US payrolls data.

Amid a better risk environment, both crude benchmarks traded on the front foot, recovering from multi-month lows. Gold prices on Comex dropped back below USD 1235 while copper futures on Comex bounce 0.50% to 2.75 level.

Main Topics in Asia

Australian Retail Sales slip to 0.2% in September, PPI beats for 0.8%

China’s Xi wants to make a fair trade deal – President Trump

China lifts Yuan midpoint to 2-month highs, as trade tensions look to ease

Germany’s Altmaier calls for global alliance in favor of market economy – Reuters News

Goldman Sachs: Steeper backwardation to push oil higher to year-end target of $80/BBL – Reuters

Asian stocks cheer easing trade tensions, Shanghai Composite stuck at 200-hour EMA

Japan’s Motegi: Oppose measures that artificially control trade flows

Key Focus Ahead

Friday see a busy calendar too, with a raft of Euro area final manufacturing PMI reports dropping in from 0815 GMT onwards. The Swiss retail sales report will be out at the same time. Ahead of these macro news, the German import prices figures will be released at 0700 GMT.  The main focus in the EU session today remains on the UK construction PMI due at 0930 GMT, which is expected to drop slightly to 52.0 in Oct versus 52.1 last.

The NA session also holds plenty of event risks, including the eagerly awaited US payrolls and wage growth numbers (due at 1230 GMT) that will throw fresh light on the Fed’s rate hike outlook in the months ahead. Alongside the US jobs data, the trade figures and Canadian employment data will be also published. Also, of note remains the Canadian trade data and US factory orders due later on Friday. The Baker Hughes oil rigs count data will be reported at 1700 GMT, which could have a significant impact on the oil markets.

EUR/USD has eroded short-term falling trendline ahead of US NFP and wage growth release

The bullish technical setup could play out if the US monthly wage growth figure, scheduled for release at 12:30 GMT, misses estimates by a big margin, forcing markets to scale back expectations of  Fed  tightening.  

GBP/USD looking to hang onto 1.3000 with US NFP in the barrel

Friday sees another reading of the US NFP report, dropping at 12:30 GMT and markets will be coiling ahead of the key jobs report, but before that will be the UK’s Construction PMI for October (forecast 52.0, last 52.1), at 09:30 GMT.  

Nonfarm Payrolls preview: wages’ growth vs. job’s creation, which one will weigh more?

Its once again Payrolls time. The US economy will release its October employment data this Friday at 12.30 GMT, and the world’s largest economy is expected to have added during that period 190K new jobs.  

US job growth expected to accelerate with strong wage gains – Reuters

As reported by Reuters, median market forecasts are anticipating a healthy uptick in reported jobs, as well as wage increases, which could spur the US Federal Reserve to even more rate hikes in the near future.

EUR/USD seen rising over 2% to $ 1.1600 in three months – Reuters poll

The currency strategists in the latest Reuters poll believe that the Euro is expected to remain under pressure in the coming months, in the wake of the economic and political turmoil in the Eurozone.