Forex Today: Aussie – the strongest as China trade optimism boosts risk further


The Asian market mood improved further after China’s State Council announced its plans to cut the additional tariffs on $75bn of US imports by half from Feb. 14th. The risk assets witnessed a fresh leg higher at the expense of the safe-havens, which were already pressured by easing concerns over China coronavirus outbreak.

Despite the rising Chinese coronavirus death toll and the World Health Organization (WHO) having played down media reports of “breakthrough” drugs discovered to combat the virus, the fears have receded, as reflected by the 2+% risk-on rally in the Asian equities and oil prices.

The US equity futures and Treasury yields added to the overnight gains, induced by upbeat US macro data, and drove the greenback to a new two-month high of 98.33 vs. its main competitors. Meanwhile, gold prices bounced-off a two-week low but remained under pressure above $1550.

Across the Asia-pac fx space, USD/JPY clinched a fresh two-week high just shy of the 110 handle while the Aussie ignored a slew of dismal Australian economic data and held onto gains above 0.6750 amid fresh trade optimism and the recovery in the Chinese yuan. The Kiwi, however, failed to benefit and traded modestly flat, having eased-off 0.6485 highs.

Amongst the European currencies, the EUR/USD pair consolidated the previous drop just below the 1.1000 level amid a broadly firmer US dollar while the cable kept losses below 1.3000. USD/CHF traded firmer near 0.9750 amid a better risk environment.

Main Topics in Asia

Coronavirus update: Hubei confirms 19,665 cases, death toll rises to 549

RBA likely to keep interest rates on hold in 2020 - Goldman Sachs

BoJ'S Masai: Necessary to continue easing to support growth

Coronavirus set to dampen China's economic growth - Fitch

US Agriculture Sec. Perdue: US must be understanding if China coronavirus impacts trade pledges

Australian PM Morrison: Economy to take 'significant' hit from coronavirus

UK’s NIESR: Plan to double economic growth unlikely to succeed

UK's Raab: Ready to negotiate a comprehensive trade deal with Australia

JP Morgan Global PMI composite output index hit 10-month highs in January

Indonesian Consumer Confidence drops sharply to 121.7 in Jan, Rupiah stalls the upside

China to cut tariffs on some goods imported from the US by half from Feb 14 - Reuters

Key Focus Ahead       

On the economic data front, the immediate focus now remains on the Reserve Bank of India (RBI) monetary policy decision and the German Factory Orders data due ahead of the European open. The session ahead is data-sparse and therefore the speeches from the European Central Bank (ECB) President and Vice-President Lagarde and De Guindos, respectively, will be closely eyed.

Later at 1000 GMT, the European Commission’s Economic Growth Forecasts will also grab some attention ahead of a slew of second-liner US macro updates, dropping in from 1230 GMT. In the American mid-morning, the focus will be on the Fed official Kaplan’s speech at 1415 GMT.

Markets will continue to pay close attention to the US-China trade-related headlines as well the China coronavirus news for some near-term trading impulse.

When are the German Factory Orders and how could they affect EUR/USD?

EUR/USD found acceptance under 1.10 on Wednesday. The psychological support was breached with a red marubozu candle. The pair, therefore, is on the defensive and could suffer a deeper drop to 1.0941 (Oct. 8 low) on poor German factory data. 

GBP/USD: Mildly negative below 1.3000 with eyes on qualitative risk catalysts

GBP/USD keeps the red for the second day in a row below 1.3000. The EU-UK tussle over fisheries, criticism of the British PM joins broad US dollar strength. The UK political headlines, coronavirus updates and the US data will be in focus.

ADP Payrolls and ISM show healthy US economy

Private payrolls almost double estimates at 291,000. Services PMI better than forecast, new orders gain. These reports come two days before the US Non-Farm Payrolls, which is an accounting of all employment across the country.

GMT
Event
Vol.
Actual
Consensus
Previous
Wednesday, Feb 05
24h
 
 
24h
 
 
Thursday, Feb 06
00:00
3.62%
3.78%
3.80%
00:00
0.42%
0.57%
0.26%
00:30
2.0%
 
-2.8% Revised from -3.0%
00:30
1.0%
 
1.3% Revised from 2.0%
00:30
5,223M
5,950M
5,518M Revised from 5,800M
00:30
-0.5%
-0.2%
1.0% Revised from 0.9%
00:30
-1
3
-1 Revised from -2
01:30
 
 
06:15
 
4.9%
4.9%
06:15
 
5.15%
5.15%
07:00
 
-6.0%
-6.5%
07:00
 
0.6%
-1.3%
07:45
 
 
-1%
08:00
 
3.75
4.00
08:00
 
 
3.6%
08:00
 
-1.4%
-3.2%
08:00
 
 
4.5%
08:00
 
-4.0B
10.2B
08:00
 
 
08:15
 
 
09:00
 
 
16.6%
09:00
 
 
09:30
 
 
93.1
n/a
 
 
0.438%
n/a
 
 
-0.236%
n/a
 
 
-0.103%
n/a
 
 
0.04%
10:00
 
 
12:00
 
2%
2%
12:30
 
 
32.843K
13:00
 
0.5%
0.4%
13:00
 
 
$559.8B
13:30
 
1.720M
1.703M
13:30
 
215K
216K
13:30
 
 
214.5K
13:30
 
1.3%
2.5%
13:30
 
 
-0.2%
14:15
 
 
15:30
 
 
-201B
16:30
 
 
1.545%
21:30
 
 
48.7
22:30
 
 
23:30
 
 
-0.2%
23:30
 
-1.7%
-2.0%
n/a
 
 
$1,323.8B
Friday, Feb 07
00:15
 
 
00:30
 
 
02:00
 
 
1.8%
05:00
 
95.9
94.7
05:00
 
90.8
90.8
05:30
 
 
-1.1%
06:00
 
$45.132B
$44.897B
06:00
 
$55.127B
$55.058B
07:00
 
-4.8%
7.9% Revised from 7.6%
07:00
 
-6.3%
9.0%
07:00
 
$38.64B
$47.21B Revised from $46.79B
07:00
 
19.1%
17.7%
07:00
 
-6.0%
16.5% Revised from 16.3%
07:00
 
261.58B
329.27B
07:00
 
-4.0%
-2.6%
07:00
 
-0.2%
1.1%
07:00
 
0.2%
-0.5%
07:00
 
€18.4B
€18.3B
07:00
 
0.5%
-2.3%
07:00
 
€22.0B
€24.9B
07:00
 
 
-5.2%
07:00
 
 
0%
07:00
 
0.3%
0.7%
07:00
 
0.3%
-0.4%
07:45
 
 
€42.05B
07:45
 
 
€47.63B
07:45
 
€-5.00B
€-5.58B
07:45
 
-0.3%
0.3%
07:45
 
 
€0.5B
07:45
 
0.2%
0.2%
08:00
 
$3.100T
$3.108T
08:00
 
2.2%
2.1%
08:00
 
 
-0.4%
08:00
 
 
0.1%
08:00
 
 
€301.2M
08:00
 
 
€484M
08:00
 
 
€157.6M
08:00
 
 
771B
08:30
 
3%
4%
08:30
 
0.0%
1.7%
09:00
 
0.4%
-0.2%
09:00
 
1.2%
0.9%
09:00
 
 
279.4B
09:00
 
 
€133.28B
10:00
 
 
0.1%
10:00
 
 
-452.7B
10:30
 
6.00%
6.25%
11:00
 
 
0.1%
11:00
 
 
€-5.194B
11:30
 
 
$466.69B
12:00
 
1.08%
1.15%
12:00
 
 
$1,460M
12:00
 
2.76%
2.83%
12:00
 
0.32%
0.41%
12:00
 
0.50%
0.56%
12:00
 
 
43.4
12:00
 
 
43.76
13:00
 
 
€114.5B
13:00
 
2.5%
2.5%
13:30
 
160K
145K
13:30
 
34.3
34.3
13:30
 
3.0%
2.9%
13:30
 
6.7%
6.7%
13:30
 
3.5%
3.5%
13:30
 
0.3%
0.1%
13:30
 
63.1%
63.2%
13:30
 
65.6%
65.5%
13:30
 
15.0K
27.3K Revised from 35.2K
13:30
 
 
3.84%
13:30
 
5.6%
5.6%
14:30
 
 
-36.77B
15:00
 
-0.1%
-0.1%
15:00
 
 
43.6
15:00
 
53.3
51.9
18:00
 
 
675
20:00
 
$15.00B
$12.51B
20:30
 
 
$330.1K
20:30
 
 
461.8K
20:30
 
 
$16.8K
20:30
 
 
£17.7K
20:30
 
 
¥-36K
20:30
 
 
€-58.9K
20:30
 
 
$-27.5K

 

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