The Reserve Bank of Australia’s (RBA) downward revision to its growth forecasts in its quarterly Statement of Monetary Policy (SoMP) knocked-off the Aussie dollar across the board, with the AUD/USD having hit fresh five-week lows near 0.7060 region. The bulls were quickly rescued by an uptick in iron-ore prices that prompted the Aussie recovery back to the 0.7080 level. Iron ore futures jumped over 5% to nearly 5 year tops amid supply disruption risks, in the wake of the crisis at Brazil’s top miner Vale SA. The Kiwi, on the other hand, traded firmer near daily highs of 0.6757, despite the New Zealand 10-year government bond yield having hit a record low. The USD/JPY pair remained trapped in a narrow range around 109.75 amid softer risk tones, as fresh concerns over the US-China trade issue keep the markets unnerved. Meanwhile, the greenback was better bid across the board amid US-China trade worries that left the pound and common-currency on the back foot heading into the European session.
Among the related markets, the Asian equity markets traded mixed, with the Nikkei 225 index down nearly 2% near 20,300 levels. Gold prices on Comex traded modestly flat below 1315 level, divided between a strong US dollar and risk-off market profile. Both crude benchmarks dropped on global growth and trade concerns while rising US supplies continued to remain a drag.
Main Topics in Asia
WTI Technical Analysis: “Rising Wedge” breakout in place, initially targeting $51.10
Trump confirms he will not meet with China President Xi before March 1st
Taxes and tariffs to be slashed under secret plan for no-deal Brexit – The Telegraph
Trump to ban Chinese telecom equipment from US wireless networks – Politico
UK PM Theresa May has approached Labour MPs for support – The Sun
RBA Statement of Monetary Policy: GDP forecasts slashed substantially
Fed’s Bullard: Yield curve suggests FOMC should tread carefully
Fed’s Bullard: Job market performing well but links to inflation weaker
AU-US 10-year yield spread hits fresh multi-decade low
New Zealand PM Arden: Exporters could suffer due to US-China trade tensions
US asks North Korea to dismantle all missiles – Yonhap
Gold: Upside remains capped near $1310 amid firmer USD
AUD bullish news: Iron ore hits highest since 2014
Key Focus Ahead
The European calendar on Friday kicks-off with the Swiss January jobless rate dropping in at 0645 GMT, soon followed by the German December trade report due at 0700 GMT. A rebound in the German exports are expected in the reported month that could calm the fears over trade. Meanwhile, the UK docket remains data-empty and hence, the Brexit-related developments will grab the market attention, as the UK PM May is set to meet the Irish PM Varadkar to bring an to the border backstop stalemate.
In the NA session, the Canadian employment and housing starts data, due at 1330 GMT, will headline amid a lack of the US economic news. At 1800 GMT, Baker Hughes US oil rigs count report will be published, which have a significant bearing on oil prices and the Loonie.
EUR/USD: Focus on 200-week MA support, put bias strongest in 7.5 weeks
All-in-all, EUR/USD looks primed for a weekly close below the 200-week MA. The bearish case could weaken if German exports data, due at 07:00 GMT, blows past expectations.
GBP/USD struggles to extend the recovery before UK PM May reaches Dublin
GBP/USD remains mostly unchanged near 1.2950 during early Friday before the UK Prime Minister Theresa May reaches Dublin to meet her Irish counterpart and discuss the problematic border plan.
Canadian jobs preview: Jobs may fall, but CAD may worry about wages
Canada releases the jobs report for January on Friday, February 8th, at 13:30 GMT. Back in December, the nation reported an increase of 9.3K positions.
USD/INR Technical Analysis: Downside favored after bearish Marubozu, bulls need break above 100-day MA
The pair charted a bearish Marubozu candle yesterday, which essentially means the bears remained in control throughout the day. A daily close above the 100-day MA, currently at 71.77, would revive the bullish view.