Forex today was characterized by broad-based US dollar strength in Thursday’s Asian trades, as the safe-haven appeal of the greenback returned amid fresh concerns over the US-China trade spat. The USD index refreshed two-week lows just shy of the 96.50 barrier, despite lagging Treasury yields. As a result, most majors traded on the back foot, with the Kiwi having suffered the most following an uptick in New Zealand’s jobless rate. The Aussie also remained on the offers and breached the 0.7100 level amid RBA’s neutral switch and weaker fundamentals.
The USD/JPY pair failed to benefit from a broadly firmer greenback and traded softer below the 110 handle, as trade risks continued to underpin the safe-haven Yen. Meanwhile, the Canadian dollar also witnessed some fresh selling vs. its American rival, as the overnight oil-price recovery lost legs amid oversupply concerns. Gold prices on Comex also slipped and neared the 1300 psychological support, as Fed Chair Powell’s speech failed to offer any reprieve to the gold bulls.
Main Topics in Asia
New Zealand: Unemployment rate rose to 4.3% in Q4 vs 4.1% expected
Cabinet Sources: UK PM May planning delay on 2nd Brexit deal vote to end Feb – The Telegraph
UK Govt: UK will fail to conclude trade deals with most non-EU countries by March 29 – FT
Fed’s Quarles: Most focused on direction of global growth, downdraft in China and Europe, trade policy
WTI: $54 holds high after supply glut regains market attention
Powell’s speech: Income inequality and sluggish productivity are biggest challenges of next decade
Gold Technical Analysis: $1297 on sellers’ call after immediate support break
Banks lowered 2019 oil price forecast in January – WSJ
US Treasury Sec. Mnuchin: Outlook for the US economy this year is quite strong
Ex-Fed Chair Yellen: Rate cuts, hikes both possible – WSJ
USD/INR Technical Analysis: 100-day MA is key resistance
White House Chief of staff Mulvaney: Will figure out wall if Congress says no – Fox
Key Focus Ahead
Today EUR macro calendar remains data-light, with the only relevant release expected to be the German industrial figures (due at 0700 GMT), which are seen rebound 0.7% m/m in Dec vs. -1.9% previous. Meanwhile, traders may look forward to the second-tier releases in the UK Halifax house prices ahead of ECB’s economic bulletin of January meeting due at 0900 GMT and the European Commission’s economic forecasts release at 1000 GMT.
Also, at 1000 GMT, the UK PM Theresa May is scheduled to meet the European Commission President Juncker in a fresh attempt to renegotiate the Brexit deal. The meeting is likely to keep the GBP markets on the edge ahead of the main event risk for today – the Bank of England (BOE) “Super Thursday” events at 1200 GMT.
The UK central bank will announce the monetary policy decision alongside the release of the meeting minutes and quarterly inflation report (QIR). Markets are expecting the BOE announcements to turn out to be non-events, as the BOE is likely to stand pat amid a lack of clarity on the Brexit issue. At 1230 GMT, BOE Governor Mark Carney’s post-policy press conference will also grab the attention for fresh hints on the UK’s inflation and growth outlook.
In the NA session, a couple of US macro news will be reported that includes the weekly jobless claims and consumer credit change due at 1330 GMT and 2000 GMT respectively. Meanwhile, the speech by the FOMC Vice-Chairman Clarida at 1430 GMT will be closely eyed for fresh dollar trades.
EUR/USD hits 2-week low, downside exposed as markets push back ECB rate hike bets to end 2020
The EUR/USD pair hit two-week lows in Asia and could slide further towards the support at 1.1330-1.13 on fading prospects of ECB rate hike.
GBP/USD: All eyes on BOE “Super Thursday”
The British Pound trades little changed around 1.2930 against the USD heading towards the London open. Global investors await the Bank of England (BoE) monetary policy meeting scheduled at 12:00 GMT in order to determine near-term market bias.
BoE Preview: Major Banks are forecasting a unanimous on-hold vote on rates
With Brexit entering an intense period, most of the banks don’t expect the BoE to alter its monetary policy in February. The central bank may revise down its near-term inflation forecasts, while not offering any major signals.
US Consumer Credit Preview: retail sales in view
Outstanding consumer credit is predicted to increase by $17.0 billion in December, lower than the prior month’s gain of $22.1 billion.