Forex today was dominated by the ongoing Yuan upsurge and sharp moves in the Aussie-dollar, as the US-China trade deal expectations heightened ahead of the 2-day meeting between the top US diplomats and China’s Vice-Premier Liu in Washington, starting later today. The Aussie dollar was a big mover, having risen to 0.7207 highs on stellar Australian jobs report before falling sharply below 0.7100 levels on Westpac’s RBA rate cut call and amid the latest headlines, citing that the Chinese Dalian port banned Australian coal imports. The Kiwi was also dragged lower sharply in tandem with its OZ neighbor, as the bears look to test the 0.68 handle. The Yuan eased-off 7-month tops against US counterpart, having sent the UD/CNY cross back above the 6.7000 level. The USD/JPY pair consolidated near 110.70, trapped in a tight range amid dismal Japanese manufacturing data and neutral FOMC minutes.
Among the related markets, the Asian equity markets traded with moderate gains, as markets await the outcome of the US-China trade talks. Meanwhile, both crude benchmarks kept its range near multi-month tops. Gold prices on Comex extended the correction from YTD tops and hovered near 1340 levels.
Main Topics in Asia
WTI slips toward $57 as API reports surprise increase in crude stocks
Australia labor market stays solid in January, employment change blows past expectations
The risk of a no-deal Brexit has risen - UK's Home Secretary
Fed’s Daly: There's nothing on the radar that says US is slipping into recession
Fed’s Daly: Need patience on rates until inflation rises faster
China’s Foreign Min: China won't resort to Yuan depreciation for competitive purposes in trade
Scottish Govt Chief Economist: No deal Brexit sees Scottish GDP fall up to 7%
RBA to cut cash rate by 25bps in August and November this year - Westpac
Offshore Yuan hits fresh 7-month high against the US dollar
Sources: US and China are drafting multiple alternative MOUs on trade talks - Reuters
Australia's 10-year government bond now yields 60 basis points less than its US counterpart
USD/INR Technical Analysis: 100-day MA is again reversing the bounce
Key Focus Ahead
Today’s EUR macro calendar is an eventful one, with a flurry of flash manufacturing and services PMI reports from across the Euro area economies dropping in from 0815 GMT. The German and Eurozone PMI readings will be closely watched for fresh hints on the Eurozone economic outlook. From the UK docket, we have the public sector net borrowings data due at 0930 GMT. Also, of note remains the ECB January monetary policy meeting accounts due at 1230 GMT.
The NA session sees the US jobless claims, durable goods orders and Philly Fed manufacturing index, all releasing at once at 1330 GMT. At the same, the Canadian ADP jobs and wholesale sales data will be reported. From 1445 GMT, the traders will closely eye the US Markit manufacturing and services PMI reports and existing home sales data for fresh dollar trades.
The focus will also remain on the developments surrounding the Brexit issue, the US-China trade talks and the EIA weekly crude stocks data for fresh trading impetus.
Besides, the speeches from the BOC Governor Poloz and RBA Governor Lowe will also remain in spotlight later in the American session.
EUR/USD picks up a bid ahead of Eurozone PMIs and ECB minutes
The bid tone around the common currency will likely strengthen further if the preliminary German and Eurozone PMI indices for February beat estimates, alleviating recession fears to some extent.
GBP/USD remains under pressure near 1.3050, Brexit, US data in spotlight
For now, developments surrounding Brexit and upcoming monthly prints of the US durable goods orders and manufacturing indices will be closely observed for fresh impulse.
Gold Technical Analysis: Pullback to ascending 5-day MA likely
On the 4-hour chart, the RSI has diverged in favor of the bears. Therefore, the yellow metal could fall back to the ascending 5-day moving average (MA) support, currently lined up $1,335.
Eurozone Feb PMI to be among the most closely watched figures today - ING
Analysts at the ING bank offer brief insights on what to expect from today’s Eurozone flash manufacturing and services PMI readings due at 0900 GMT.
US Durable Goods Preview: Shutdown reporting vs the trend
The US Census Bureau will issue its delayed Durable Goods report for December on Thursday February 21st at 8:30 am EST, 13:30 GMT. New orders for durable goods are predicted to increase 1.7% in December following November’s 0.7% gain and the 0.8% rise in October.
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