Forex Today: Aussie outperforms amid Asia risk-off; Services PMIs in focus

Forex today was a quiet Asian affair this Thursday, with China out this week and the recent risk-off action in the global equities keeping investors on the back seat. Markets continue to weigh in the US recession risks amid renewed US-EU trade tensions and growing US President Trump’s impeachment bid. Therefore, the US dollar continued to remain broadly-offered amid a three-week low recorded in the US benchmark 10-year Treasury yields that limited the moves in the USD/JPY pair above the 107 handle.  

Markets paid little heed to the comments from the Bank of Japan (BOJ) policymaker Funo, although USD/JPY’s downside remained capped by positive Wall Street futures. Gold prices regained some poise amid increased safe-haven flows and hovered around 1500 levels while oil prices traded modestly flat amid a bigger-than-expected US crude stocks build and economic jitters. However, the higher-yielding Australian dollar was unperturbed by the tepid market mood and clung to daily highs near 0.6720 vs. the buck, as traders shrugged-off disappointing Australian trade figures.

Meanwhile, both the Cable and EUR/USD remained within a tight trading range, as the focus shift towards the EUR economic docket for fresh trading impetus.  

Main Topics in Asia

USTR’s tariff list on the EU goods and comments

UK Labour MPs suggest they will help PM Johnson’s Brexit deal pass through Commons – Telegraph

Brussels Ready To Bypass Boris Johnson And Grant A Brexit Extension – Times

Johnson's compromise allows a “meaningful Brexit” without the need for physical checks on the border - The Times

Michael Gove argued new Brexit plan from PM Johnson to be approved by Britain’s Parliament - RTRS

BoJ's Funo: Uncertainty rising over the global economy’s outlook

Australia Trade Balance: Missed surplus expectations at 5.926M (AUD is a few pips higher regardless)

EU’s Verhofstadt: Initial reaction to UK proposals 'not positive'

White House Adviser Navarro: Hong Kong unrest is context for trade talks

US 10-year Treasury yield hits 3-week low

Indonesian Pres. Widodo: Indonesia will open up to more foreign investment

Key Focus Ahead

The Markit Services PMI reports will dominate Thursday’s macro calendar on both sides of Atlantic, as trade, global economic slowdown and UK/US political tensions continue to dent the risk appetite. The UK Services PMI, due at 0830 GMT, will hog the limelight in the EU session ahead of the Eurozone Producer Price Index and Retail Sales data slated for release at 0900 GMT.

There is more of relevance from the US dockets, with the weekly Jobless Claims and Fed Official Quarles speech due to be published at 1230 GMT, followed by the key Non-Manufacturing PMI and Factory Orders data at 1400 GMT. At the same time, the Bank of England (BOE) policy maker Tenreyro is also due to speak and his comments will be closely eyed amid ongoing Brexit chaos.

EUR/USD: Bounce stalls at key hurdle despite the drop in US yields

EUR/USD failed to take out key resistance at 1.0967 in Asia despite the losses in the US 10-year yields.  US President Trump's decision to impose tariffs on the EU likely capped the upside in the EUR.  The spot could rise to 1.10 if the US ISM Services PMI disappoints.

GBP/USD: Sidelined amid Brexit drama, eyes on UK Services PMI, politics

In addition to contrasting Brexit signals, markets’ cautious trading ahead of the key data/events also limits GBP/USD moves as it hovers around 1.2300 ahead of the London open on Thursday.

US Service Sector September PMI Preview: How slow is slow?

Service sector sentiment expected to fall in September. Manufacturing PMI was much weaker than predicted, contracting for the second month. Payrolls have declined but remain in solid expansion.

US consumer sentiment, payrolls and the threats to growth

The decline of ADP and NFP payrolls this year has highlighted the danger of the unbalanced nature of the long running US economic expansion. Thursday's services PMI and Friday's NFP will help determine whether the immediate market concerns about the US economy are warranted.