Forex Today: Kiwi rallies hard on surprise China turnaround; eyes on Lagarde, PMIs
|Signs of stabilization in the Chinese economy, in the wake of a surprise upturn in the world’s second-largest economy’s manufacturing sector activity, overshadowed the negative US-China trade reports and mixed Australian data. Therefore, the market mood remained lifted across Asia on Monday, having boosted the higher-yielding assets at the expense of the safe-havens such as Yen, Gold etc.
Across the fx board, the Kiwi was the top gainer, up almost 0.50% near 0.6450 amid the latest Chinese optimism and the rebound in oil prices. Meanwhile, the resource-lined CAD failed to benefit from firmer oil prices and remained on the back foot near 1.3300 levels. The Aussie also jumped to multi-day tops near 0.6780 region while the Yen dropped to six-month lows against the US dollar at 109.72, tracking the gains in the US equity futures, Asian equities and the US Treasury yields.
Amongst the European currencies, EUR/USD held steady above the 1.10 handle while GBP/USD slipped towards the 1.29 handle on narrowing Conservatives’ lead over Labour Party and broad US dollar recovery.
Main Topics in Asia
China wants US tariffs rolled back in phase one trade deal - Global Times
UK Survation Poll conducted 26-30 Nov: Conservative: 42% (+2) - Labour: 33% (+3)
Caixin China manufacturing PMI: 51.8 vs 51.7 in October
PBOC’s Yi signals policy to stay cautious amid uncertain data – Bloomberg
NZ Treasury: November data was fairly mixed, points to further growth slowdown
USD/IDR hits six-week highs as Indonesia's CPI misses estimates with 3.00%
EU’s Dombrovskis issues Brexit warning over city of London access – FT
Key Focus Ahead
Markets gear up for a busy start to a new week and month as well, with the final readings of the Euro area and the UK Manufacturing PMI to dominate the EUR calendar ahead of the European Central Bank (ECB) President Lagarde’s testimony before the European parliament at 1400 GMT. Markets will closely hear her testimony on the monetary policy and economy for fresh EUR trades.
In the NA session, the US Manufacturing PMI data from both Markit and ISM will headline alongside the Canadian Markit Manufacturing PMI report. Apart from the data, the US-China trade-related developments and risk trends will continue to play a pivotal role in Monday’s trading.
EUR/USD: Flashing red despite upbeat China data, focus on Lagarde's testimony, US data
EUR/USD is not impressed by the upbeat China factory data and is flashing red ahead of the European Central Bank (ECB) President Lagarde's testimony before the European parliament.
GBP/USD pays little heed to UK politics ahead of Manufacturing PMI
The GBP/USD pair looks for fresh direction as it trades just ahead of 1.2900 while heading into the London open on Monday.
US Manufacturing PMI: October’s promise looking for confirmation
Factory sector confidence to rise but remain in contraction. Unexpected jump in October business spending may offer promise. Retail sales and GDP stronger than expected. Potential dollar rally awaiting improved US statistics.
The week ahead will determine the near-term fate of the market's risk barometer. AUD/JPY is on the cusp of a major rebound from key technical support. Bulls will hunt down a 50% mean reversion or fall fate to an attack towards the 73 handle.
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