Forex today witnessed a fresh leg lower in the US dollar across its main competitors and refreshed three-month lows in Thursday’s Asian trading session, offering a fresh lift to the Antipodeans. The Aussie dollar rebounded sharply a bid to retest the 0.72 handle amid a rally in gold and the Yuan, having dipped to 0.7145 levels following the Chinese inflation miss. The Kiwi recovered from lows but remained capped by the 0.68 handle amid a reduced appetite for the risk assets, as the Asian equities and oil prices tumbled.
The USD/JPY pair, on the other hand, slipped back below the 108 level, as the Yen regained momentum amid risk-aversion amid US-China trade deal uncertainty and Fed pause risks. Among the European currencies, the Euro rose as high as 1.1570 before reverting to the midpoint of the 1.15 handle while the pound traded on the defensive sub-1.28 level amid looming Brexit vote uncertainty.
Main Topics in Asia
BOJ’s Kuroda: Will maintain QQE with curve control as long as needed to achieve 2% inflation target
China’s CPI eases to 1.9% y/y in December, misses estimates
China relaxed rules on shorting stock index futures – Reuters
Gold Technical Analysis: Eyes $1,300 after triangle breakout
UK’s Hammond: No-deal Brexit would harm its people
N. Korea’s Kim: Will work for ‘welcomed’ result in second Trump summit – Xinhua
World Bank India’s GDP forcast unchanged at 7.3%
Iron ore price jump to $75 a ton is not sustainable – Goldman Sachs´
Oil prices slip after 5 percent surge
Key Focus Ahead
Markets anticipate another non-event EUR calendar today, as it remains a thin showing in terms of relevant macro news. At 0930 GMT, the BOE credit conditions survey will be published that is likely to have virtually no impact on the GBP markets, as the Brexit vote-related uncertainty continues to loom.
Ahead of the US Open, the European Central Bank (ECB) will publish its minutes of the December monetary policy meeting at 1230 GMT. From the US docket, the usual weekly jobless claims will drop in at 1330 GMT alongside the releases of the Canadian building permits and new housing price index. Late-NA session, New Zealand’s building permits data will be out at 2145 GMT.
Apart from the macro data, following is the list of the speeches due by the Federal Reserve (Fed) officials scheduled later on Thursday.
1335GMT: Fed’s Barkin speaks on ‘Ensuring Long-Term Growth’
1700GMT: Fed Chair Powell speaks at the Economic Club of Washington
1740GMT: Fed’s Bullard speaks on the economy and policy
1800GMT: Fed’s Evans, speaks at an economic forecasting event
1820GMT: Fed’s Kashkari address on immigration and economic growth
2230GMT: Fed Vice Chairman Clarida speaks to Money Marketeers in New York
EUR/USD: Bull breakout triggered on dovish Fed
The dollar has likely lost its haven appeal. After all, the Fed policy has become sensitive to the volatility in stocks and bonds. A heightened risk aversion, therefore, will likely boost Fed rate pause odds and strengthen the bullish case in EUR/USD.
GBP/USD under tension as Brexit and Fed chatter pull the pair apart
Thursday sees only mid-tier data for the UK, with the Bank of England’s (BoE) Credit Conditions Survey due at 09:30 GMT, while the US side sees yet another Fed appearance, with Fed chair Jerome Powell slated for a speech at 17:00 GMT.
Japan’s PM Abe to meet UK PM May on Thursday
The UK PM Theresa May’s Office, 10 Downing Street, confirmed that the Japanese PM Shinzo Abe and May will meet on Thursday to discuss the economic opportunities that exist for both nations as the UK leaves the European Union (EU), Reuters reports.
Markets pause for breath after Fed minutes
Hot on the heels of yesterday’s Fedspeak overload, we have another four speakers today (one a repeat from yesterday). Powell, Bullard, Evans and Clarida are all on tap and are expected to affirm the dovish tone of the minutes and previous speakers.