Asia Wrap (GBP-EUR-Gold -Oil)

Stephen Innes SPI Asset Management

Oil Markets

Oil is down more than 1% from Monday's intraday highs after a relatively muffled reaction to weaker Chinese GDP growth, and the restart of the US Gulf of Mexico production which has left oil bulls looking to the API inventory report for support.

Monday's release of EIA Drilling Productivity Report which indicated US shale is still expected to continue growing, with August forecast at 8.545mb/d vs 8.27mb/d in April is keeping a lid on prices today.

Gold Markets

Gold has had a sluggish session ahead of the US retail sales report. But a stronger USD against both the EUR and GBP have dampened whatever bullish edge the markets had today. But Fed speak should continue to be more supportive for Gold than not this week so dips will likely in demand even on a positive retail sales print.

The Pound

Sterling has been under intense selling pressure after both candidates for UK Prime Minister's position toughened their stances on the Withdrawal Agreement and the Irish backstop at the final debate which suggests the Pound will remain extremely vulnerable if the no-deal Brexit continues gaining momentum.

The Euro

Downward pressure on the Euro could recommence as the market turn focus the ECB who are teeing up 10 bp depo rate cut in September and December. Also, the ECB could reinforce that “all its instruments" are ready willing and able mantra which should keep the market focused on QE. In addition currency markets will likely disengage from any a 50 bp rate cut probability when we move closer to FOMC, which should temper USD weakness.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold sticks to a negative bias below $5,000; lacks bearish conviction

Gold remains depressed for the second consecutive day and trades below the $5,000 psychological mark during the Asian session on Tuesday, as a positive risk tone is seen undermining safe-haven assets. Meanwhile, bets for more interest rate cuts by the Fed keep a lid on the recent US Dollar bounce and act as a tailwind for the non-yielding bullion, warranting caution for bearish traders ahead of FOMC minutes on Wednesday.

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The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

US CPI is cooling but what about inflation?

The January CPI data give the impression that the Federal Reserve is finally winning the war against inflation. Not only was the data cooler than expected, but it’s also beginning to edge close to the mystical 2 percent target. CBS News called it “the best inflation news we've had in months.”

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.