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Forex Today: AUD pares CPI-led losses, USD drops on SOTU, EZ CPI, FOMC eyed

Forex today witnessed a busy and data-heavy Asian session today, with downbeat Australian CPI and Chinese manufacturing PMI reports knocking-off the Antipodeans lower. However, the bearish momentum soon lost traction, as resurgent USD supply following Trump’s first State of the Union (SOTU) Address, helped the Antipodeans to stage a comeback. The USD/JPY pair faded a spike above the 109 handle and consolidated in a narrow range below the last, as traders digested the comments from the BoJ Governor Kuroda amid more BOJ JGB buys.

Meanwhile, gold and copper prices benefited from broad-based US dollar softness while oil prices traded on the back foot, as the US crude inventory buildup weighs. The Asian markets traded mixed, with most major markets declining slightly on higher Treasury yields and unimpressive Chinese data.

Main topics in Asia

Australia CPI rose 0.6 percent in the fourth quarter

Inflation, as represented by the consumer price index (CPI), rose 0.6 percent quarter-on-quarter (q/q) in the fourth quarter showed the data released by the Australian Bureau of Statistics. Markets were expecting a rise to 0.7 percent.

BoJ’s Kuroda: Need to patiently proceed with strong monetary easing

The Bank of Japan (BoJ) Governor Kuroda is on the wires again, via Reuters, this time speaking in Parliament in Tokyo.

Trump: US seeing rising ages on strength of economy

The US President Donald Trump is on the wires now, via Reuters, delivering the much-awaited “The State of the Union Address” in Washington DC.

Trump: Infrastructure approval process should be streamlined down to 1-2 years

More headlines hitting the wires, via Reuters, as the US President Trump’s State of Union Address continues.

BOJ buys more of short-term JGBs

The news is crossing the wires that Bank of Japan (BOJ) bought JPY 330 billion worth of Japanese Government Bonds (JGBS) maturing in 3 to 5 years.

Key Focus ahead

The EUR calendar for today also remains quite eventful, with the German retail sales and jobs data due on the cards ahead of the European open while the Eurozone flash CPI estimate and the unemployment rate will be reported later at 1000GMT. We have no macro news from the UK docket today, and hence, the pound will remain at the mercy of the Brexit headlines and USD dynamics.

Moving on, the NA traders will gear up for the Canadian GDP release alongside a batch of the US economic releases, which include the ADP jobs report, Chicago PMI and pending home sales. Also, of note will be the US EIA crude inventories report due to be reported in the American morning.

EUR/USD continues gains, looking to 1.2500 ahead of EZ CPI

EUR/USD continues to gather steam on the current bull trend, with the broad dollar index continuing to fall away under President Donald Trump's administration, and preliminary inflation data for the EZ continuing to show promise.

GBP/USD - Risk reversals adopt a bearish bias despite bullish outside day

The GBP/USD one-month 25-delta risk reversals turned negative yesterday for the first time since Jan. 12. The negative print indicates that implied volatility for GBP puts (bearish bets) is more than that of GBP calls (bullish bets).

Eurozone: Key economic events ahead - HSBC

Analysts at HSBC provide a brief list of macro events that are lined up for release from the Euroland.

FOMC preview - Nomura

"We expect no change in the policy rate at the upcoming 30-31 January FOMC meeting and no material changes or surprises in the post-meeting statement. Incoming data during the intermeeting period have been largely positive, affirming continued growth above potential. “

GMT
Event
Vol.
Actual
Consensus
Previous
Wednesday, Jan 31
07:00
 
2.8%
4.4%
07:00
 
-0.3%
2.3%
09:00
 
-17K
-29K
09:00
 
5.5%
5.5%
09:50
 
 
10:00
 
8.7%
8.7%
10:00
 
1.0%
1.1%
10:00
 
1.3%
1.4%
12:00
 
 
4.5%
13:15
 
185K
250K
13:30
 
0.6%
0.7%
13:30
 
-0.1%
1.4%
13:30
 
0.3%
5.5%
13:30
 
0.4%
0.0%
14:45
 
64.1
67.8 Revised from 67.6
15:00
 
-0.2%
0.6%
15:00
 
0.4%
0.2%
15:30
 
-0.100M
-1.071M
19:00
 
 
19:00
 
1.5%
1.5%
22:30
 
 
56.2
23:50
 
 
¥411.1B
23:50
 
 
¥-148.2B
Thursday, Feb 01
n/a
 
 
0.7%
00:30
 
-8%
-3%

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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