Fresh US-China concerns over the Xinjiang human rights bill added to the ongoing trade deal uncertainty in Wednesday’s Asian session, as Asian stocks followed the Wall Street lower. The risk tones remained broadly softer, as the safe-havens such as the yen and gold continued to find support.
Across the G10 currencies, the Aussie was the weakest and slipped towards 0.6800, having faced a double whammy from the trade gloom and poor Australian GDP induced increased RBA dovish expectations. The Kiwi also turned south to test the 0.65 handle, although the descent was slowed down by a big beat on the Chinese Caixin Services PMI. The Yen, on the other hand, traded on the front vs. the greenback, driving USD/JPY lower to mid-108s. However, the losses were limited by a rebound in the US Treasury yields and small gains in the US equity futures. Meanwhile, the resource-linked CAD traded better bid against its American rival, tracking the gains in oil prices.
Amongst the European currencies, both EUR/USD and GBP/USD corrected a part of the recent rally and now awaits fresh economic news for a fresh trading impetus.
Main Topics in Asia
S&P reaffirms India's stable outlook
US Commerce Sec. Ross: Trump administration has not ruled out imposing tariffs on imported autos
Iraq’s OilMin: Deeper cuts being preferred by members
US house intelligence committee approves president Trump impeachment report – RTRS
The US House has passed a bill demanding sanctions on senior Chinese officials - RTRS
Chinese top diplomat Yang Jiechi: China and US must increase strategic communications – RTRS
Chinese Foreign Ministry: Urges US to stop wrongdoing re Xinjiang bill
Caixin Services PMI beats expectations, 53.5 vs 52.7 vs the prior 51.1
Sources: White House considered kicking Huawei out of US banking system - Reuters
Australian fund managers are preparing for RBA QE
China capex growth hits 3-year low as weak economy, trade war drag – Reuters study
Russia fulfills OPEC+ deal in November by 85% - TASS
Beijing US embassy spokesman: Will not speculate on possible future actions by China
Key Focus Ahead
It’s a hectic Wednesday schedule, in terms of the economic events lined up for release, with the Service PMI reports to dominate on both sides of Atlantic while the risk sentiment will continue to get influenced by the US-China trade and political developments. From 0815 GMT onwards, the Euro area Final Services PMI data will start trickling, with the German and Eurozone numbers more of relevance. The UK Services PMI due at 0930 GMT will grab some attention ahead of the US ADP Employment Change data at 1315 GMT and US Services PMI reports due around 1500 GMT.
The Bank of Canada (BOC) monetary policy decision will hog the limelight in the NA session at 1500 GMT, soon followed by EIA Crude Stock data and BOC Governor press conference at 1530 GMT and 1615 GMT respectively.
EUR/USD: Bulls need big miss on US data to force a breakout
EUR/USD remains below key resistance at 1.1097 amid renewed trade tensions. The focus is on the US ADP Employment report and ISM Non-Manufacturing data.
GBP/USD steadies around 1.3000 ahead of UK Services PMI
Following its run-up to the six-week top, GBP/USD hovers around 1.3000 heading into the London open.
US ADP Employment November Preview: For better or worse all roads lead to China
ADP private payrolls expected to climb in November. Revisions subtracted 70,000 from totals over the past six months. Weak business confidence the major negative factor.
US Services PMI November Preview: Manufacturing indicates lower
Services PMI forecast to dip marginally in November. Manufacturing PMI dropped unexpectedly last month after rising in October.
Bank of Canada Preview: Upbeat tone on investment may send C$ higher
The Bank of Canada is set to leave the interest rate unchanged in its last decision of 2019. Encouraging investment figures may result in an upbeat sentiment.
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