The USD bulls regained poise in Wednesday’s Asian trading while the Aussie got hammered across the board following a miss on the Australian headline and core CPI figures for the first quarter. Disappointing Australian inflation report led the markets to re-price their RBA rate cut forecasts to as soon as the next month, drowning the AUD/USD pair to six-week lows at 0.7027. The Kiwi also lost ground in tandem with its OZ peer, the AUD, and hit fresh three-month lows of 0.6614. The sentiment around the Antipodeans was also dented by a broad decline across the commodities space, with oil prices extending its retreat from six-month tops. Gold prices on Comex headed back to YTD lows below 1270 levels, despite mixed Asian equities and negative Treasury yields.
Meanwhile, the Canadian dollar traded firmer again this session, as markets resorted to repositioning ahead of the Bank of Canada (BOC) rate decision. The safe-haven Yen picked-up bids towards Asia closing but traded within its familiar 111.75-112.00 range while both the European currencies, the Euro and the GBP, traded little changed, awaiting fresh impetus from the German data and Brexit-related headlines.
Main Topics in Asia
Labour says Theresa May unwilling to offer key Brexit concessions - The Guardian
Venezuela imports crude for the first time in five years – Bloomberg
PBOC injects liquidity via one year TMLF
WH: USTR Lighthizer and Treasury Sec. Mnuchin to travel to Beijing for trade talks starting April 30
Australia's Q1 CPI arrives at 0.0% q/q, misses estimates (Aussie slumps)
AUD/USD: Premium for put options rises with the weak Aussie CPI release
AUD/USD: Premium for put options rises with the weak Aussie CPI release
Brent Oil Technical Analysis: Rally stalls with double top on hourly chart
IMF’s Lagarde: Had a meeting with the PBOC Governor Yi regarding international cooperation
UK employers fear Brexit hit to economy, but plan more hiring – REC Survey
Gold: Bears target $1263 amid broad USD demand
Key Focus Ahead
Markets gear up for a busy EUR economic calendar, the first one after the Easter holiday break, with the key German IFO survey on the radar for fresh hints on the Euro area growth outlook. The headline German business climate index for April (due at 0800 GMT) is seen a tad firmer at 99.9 vs. 99.6 previous. Should the data disappoint the Euro will take a fresh beating across the board. At the same time, the Swiss ZEW survey for April and the European Central Bank (ECB) Economic Bulletin will be published. From the UK docket, the second-tier macro release in the March public sector borrowing data will be reported at 0830 GMT.
Moving on, the Bank of Canada (BOC) monetary policy decision at 1400 GMT and the post-policy press conference at 1415 GMT will headline the NA trading. The BOC is likely to keep the rates on hold but its assessment of the economic outlook and the take on the future policy path will be closely eyed for any big moves in the Canadian dollar. Also, the focus will be on the EIA crude stocks data dropping in at 1430 GMT for fresh oil trades and its eventual impact on the Loonie. Meanwhile, the US calendar remains data-empty for today.
EUR/USD: Key support exposed ahead of the German IFO data
The bearish-EUR case may strengthen further if the forward-looking German business climate, expectations and current assessment indices for April, published by the IFO, miss estimates by a wide margin. The data is due for release at 08:00 GMT.
GBP/USD: Sellers in command amid 200-day SMA break, Brexit pessimism
Ongoing Brexit deadlock and likely future troubles for the UK PM May joins dip beneath 200-day SMA to please the bears. The absence of economic data/events pushes traders more towards qualitative factors.
Bank of Canada Rate Policy Preview: Shift to neutral
The Bank of Canada will maintain its overnight target rate at 1.75% when it concludes its policy meeting on Wednesday, maintaining the pause which began last October.
FX: How to trade in a low volatility market
This month, volatility in the currency market fell to its lowest level in five years. In times like this, many analysts argue that big moves are on the horizon but it could be upwards of a year before that happens.
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
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.