Forex Today: AUD hit on China downgrade, ECB Draghi, Fed minutes - Key

An eventful Asian session today, with Fedspeaks, NZ trade balance and Aus construction work done reported. However, macro news had limited impact on the markets, as Moody’s downgrade of China’s credit ratings dominated Asia. Worst hit from China’s ratings downgrade was the Aussie, Yuan, metals and Chinese equities.  Meanwhile, oil prices continued to trade at 5-week highs ahead of today’s crude inventories report and Thursday’s key OPEC meeting.

Heading into Europe, the economic calendar remains absolutely data-dry and hence, attention turns towards the speech due from the ECB President Draghi for fresh impetus. Meanwhile, in the NA session, we have the Bank of Canada (BOC) monetary policy decision and US existing home sales lined up for release ahead of the much-awaited FOMC minutes.

Main topics in Asia

Moody’s downgrades China’s rating to A1 from Aa3, changes outlook to Stable from Negative

Ratings agency Moody’s has downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to Stable from Negative. 

China stocks slump -1 % on Moody’s rating downgrade

Stocks on the Chinese bourses stalled a three-day rally and dropped sharply, afterMoody’s Investors Service downgraded the country’s credit ratings, warning that the outlook for its financial strength will worsen. 

White House defends ‘elementary double count’ error in the budget

Lawrence "Larry" Summers (a former economic adviser to former president Barack Obama, and Treasury secretary in Bill Clinton's administration) pointed to an ‘elementary double count’ error which no serious business person would make.

Oil trades at 5-week high as API reports draws in oil, gasoline & distillates

Oil prices on both sides of the Atlantic trade close to 5-week high after the American Petroleum Institute (API) reported a drop in oil, gasoline and distillate inventories. 

Key Focus ahead

EUR/USD looks vulnerable ahead of ECB Draghi, Fed minutes

The EUR/USD pair failed several attempts to regain 1.12 handle and traded almost unchanged throughout the Asian session, as markets await ECB Draghi’s speech for next direction.

NZ: 2017 Budget can afford to be more generous – Westpac

Michael Gordon, Acting Chief Economist at Westpac, suggests that NZ’s 2017 Budget can afford to be more generous than last year’s effort as net debt is on track with the Government’s long-term target, and the tax take is running stronger than expected.

GBP/USD Forecast: holds within one-month old ascending trend-channel, FOMC minutes awaited

Today's US economic docket features the release of existing home sales data but investors' focus would remain glued to the release of May FOMC meeting minutes, which is likely to act as a key driver of the markets’ near-term momentum. 

Will OPEC boost oil prices and revive reflation trade?

The first global oil output cut deal since 2001 reached in December 2016 failed to push oil prices above $60 levels. In fact, spikes to near $60 were short lived and prices actually fell to $45 levels.