Forex Today: Aussie CPI fails to confront broad risk-off, focus on Fed rate decision

  • Risk aversion gains momentum ahead of the key event.
  • US-China trade optimism fades, Turkish sanctions to come back, AU CPI met upbeat market expectations.
  • Fed, BOC, US GDP and many more to keep global traders busy.

Not only receding odds of successful US-China trade talks in Chile, if at all taking place, but headlines concerning Turkey also add to the market’s risk aversion ahead of the key data/event flow on early Wednesday. Investors fail to cheer Australia’s (AU) Consumer Price Index (CPI) meeting the upbeat forecasts and Japan’s Retail Sales rallying before sales-tax hike as trade sentiment worsens prior to the US Federal Reserve’s (Fed) interest rate decision.

With this, the US 10-year Treasury yields take a step back from multi-week high to 1.83% while Asian stocks trade in red and safe-havens recover. The US Dollar Index (DXY) stops two-days declines due to its risk-safe allure whereas the Euro (EUR) stood a little changed prior to French/German data. Further, the British Pound (GBP) fails to extend the latest recovery, despite one-stage approval to the Prime Minister’s early election motion, as traders worry about the Tory leader’s ability to break the multi-year-old Brexit impasse. Moving on, Antipodeans and commodities worry of the latest negative signals from Chinese diplomats and Chile problems raising doubts on November meeting.

Main Topics in Asia

AUD bearish: Dalian iron-ore drops 2% on rising supplies, likely delay in US-China’s trade deal

Yuan to rise against USD amid stabilizing China’s economic growth outlook – China Press

China CommerceMin to stop levying anti-dumping tariffs on PVC imports from US, S. Korea, Japan and Taiwan from Sept. 29

Moody’s official: Japan's credit profile is quite resilient to expectation of global cyclical slowdown

Australian CPI arrives in line (AUD positive)

China warns U.S. criticism at U.N. over Xinjiang not 'helpful' for trade talks - RTRS

PM Johnson: December 12th poll will get Brexit done - Times

Turkish Foreign Ministry: Turkey strongly condemns backing of US sanctions – Reuters

US House of Representatives voted 403-16 to impose sanctions on Turkey for offensive in Syria

Key Focus Ahead

A trader should be multi-focused today to keep a tab on all of the top-tier data/events. However, monetary policy meetings by the US Fed and the Bank of Canada (BOC), coupled with the US Gross Domestic Product (GDP), will stand out others.

For an immediate direction during the European/London session investors could observe the Eurozone Business Climate, German CPI and Spanish GDP. Following that, the United States’ (US) ADP Employment Change numbers could offer a buffer to markets ahead of the BOC and the US GDP leading all the way to the Fed decision. While the BOC isn’t expected to alter present monetary policy, a highly likely third rate cut from the Fed will highlight the monetary policy divergence between the Canadian and the US central bank.

EUR/USD: Correction has likely ended, focus on German CPI and Fed rate decision

Tuesday's bullish hammer indicates the path of least resistance for EUR/USD is on the higher side. A below-forecast German CPI will likely play spoilsport. Fed is expected to keep rates unchanged and signal a pause in the easing cycle.  

GBP/USD: Breakout remains elusive even as UK heads for December election

GBP/USD remains stuck at key resistance despite the UK parliament approving the December election. A flag breakout on the 4-hour chart would revive the bullish view. The bull flag will likely fail if the Federal Reserve delivers a hawkish rate hike. 

USD/JPY bears in control in technically bearish short-term set-up

USD/JPY bears taking on the 50-HMA to the downside in a soured risk environment. Trade talks/deals, FOMC and US GDP all in focus.

USD/TRY ticks higher as the US House of Representatives approved sanctions on Turkey

USD/TRY is better bid on escalating US-Turkey trade tensions. The US House of Representatives approved biting sanctions on Turkey's economy.

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