Optimism about progress on opening economies globally whetted risk sentiment in Wednesday’s Asian trading but investors remained cautious ahead of the key US Q1 GDP and FOMC decision.
Also, the US-China conflict over Beijing’s coronavirus response and awful US Consumer Confidence data kept the traders on the edge. Asian markets were a mixed bag, with the Japanese stocks lagging while the US equity futures jumped nearly 1.50%. The US Treasury yields, however, remained soggy, with the US dollar downed once again amid a cautious optimistic environment.
Crude oil prices extended Tuesday’s bounce, with WTI having briefly regained $14 mark. Gold prices also rose after three-day declines, in the wake of the dollar repositioning ahead of the key event risks.
On the currency front, USD/JPY continued to tack the dollar trend and fell to a new six-week low near 106.50. The Antipodeans were the top performers across the fx board, as economic re-openings down under buoyed the sentiment. AUD/USD reached fresh seven-week highs near 0.6540, also helped by upbeat Australian Q1 CPI figures. The Kiwi also followed suit and jumped back above 0.6100. USD/CAD faced rejection at 1.4000 and dropped below 1.3950, as the Canadian dollar was rescued by the oil-price rebound.
Among the European currencies, EUR/USD consolidated the Asian bounce to 1.0855 while the cable veered towards 1.2500, having added 0.50% on the day.
Main topics in Asia
Australian Treasurer Frydenberg: Australia will not bow to economic coercion
NZ Trade Balance: A monthly trade surplus of NZ$672.00 million in March
Australia Q1 RBA trimmed mean CPI +0.5 pct QoQ vs poll +0.4 pct
Italy’s Gualtieri: Economic fundamentals are solid
Oil price crash pushes Saudi's FX reserves to 9-year low
Australian PM Morrison: Want a global coronavirus investigation
China parliament to hold annual meeting starting May 22 – Xinhua
Moody’s slashes near-term oil price forecasts
Gold Price Analysis: Currency debasement fears could push yellow metal to all-time highs
Key focus ahead
We have a busy EUR macro calendar today, kicking-off with the German Import Price Index data at 0600 GMT. Later in the European session, a slew of Eurozone Business Sentiment and Confidence numbers will be reported at 0900 GMT, keeping the EUR, GBP traders somewhat busy. Brexit-related headlines amid uncertainty over the deadline and post-transition talks will also grab some attention for the pound traders.
Ahead of the US Open, the German Preliminary CPI and US Q1 Advance GDP release will hog the limelight at 1200 GMT and 1230 GMT. In the American mid-morning, the US Pending Homes Sales and EIA Weekly Crude Stocks Change data will be published.
The main event of note, however, remains the US FOMC monetary policy decision due at 1800 GMT, followed by Chairman Jerome Powell’s press conference at 1830 GMT. The Fed is unlikely to act at its April policy meeting but its outlook on the economy and forward guidance will be closely watched out for.
EUR/USD rises as dollar weakens ahead of FOMC
EUR/USD is reversing Tuesday's losses on broad-based US dollar weakness. Risk-on in Asia weakened the haven demand for the dollar. Markets likely to be cautious ahead of Wednesday's Fed rate decision.
GBP/USD: Bulls are back in motion towards 1.2500 ahead of the key day
GBP/USD defies the previous day’s weakness amid broad US dollar declines. EU sees Brexit talks ‘at an impasse’, Tories think deadline bias will push the bloc. US GDP, FOMC will decorate the calendar, virus/Brexit updates will be the key as well.
US First Quarter GDP Preview: Prelude to catastrophe or singularity?
Annualized GDP expected to be the lowest since the financial crisis. Quarter dragged down by the labor and business collapse in March. Dollar and risk aversion could jump from a difficult number.
Fed Preview: Taking a break after two months of madness? Addicted markets may fall, dollar rise
The Federal Reserve is set to leave its policy unchanged in the first scheduled meeting since January. Stocks may fall and the safe-haven dollar may rise in response.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.