Forex Today: CAD jumps on NAFTA talks, UK jobs, FOMC in focus

Forex today was a quiet affair in a holiday-thinned Asian session, with the Japanese traders off on a National holiday, which left most majors in a tight trading range. Markets also witnessed caution trading ahead of the all-important Fed rate hike decision. Despite thin trades, the Canadian dollar outperformed on the NAFTA headlines after the Trump administration dropped the contentious auto-content proposal from NAFTA talks. Also, higher commodities’ prices kept both the Aussie and Loonie underpinned while the Kiwi traded on the back foot ahead of the FOMC and RBNZ policy outcomes.

Meanwhile, the Asian equity markets traded mixed, with the Japanese benchmark index, the Nikkei 225, down -0.50% near 21,380 levels, Australia’s ASX 200 steady around 5,950 and China stocks up nearly 0.50%.

Main topics in Asia

US Treasury Sec. Mnuchin: Tariffs are not about US protectionism - Reuters

As reported by Reuters, US Treasury Secretary Steven Mnuchin faced intense criticism during the two-day G20 finance ministers' summit in Buenos Aires this week. 

US finds wire rod dumping from five countries - Reuters

The US Commerce Department has found evidence of wire rod dumping from five separate nations according to Reuters.

BOJ's Kuroda: Central bank policy normalization won't have direct negative impact on global growth

“Don't think central bank policy normalization will have a direct negative impact on global growth.”

US drops contentious auto-content proposal from NAFTA talks - The Globe and Mail

The Trump administration has dropped a contentious demand that all vehicles made in Canada and Mexico for export to the United States contain at least 50 percent US content, according to Canada's Globe and Mail. 

UK’s Fox: UK and Hong Kong looking to reduce barriers to trade

The UK Trade Secretary Liam Fox was on the wires last hour, via Livesquawk, speaking in Hong Kong (HK) on the UK-Hong Kong trade relationship.

Dollar Index holds above 90.00, focus on Fed

The dollar index (DXY) is trading in the sideways manner around 90.30 as investors await the all-important US Fed rate decision.

Abenomics is paying off, BOJ's easy policy needs to stay for now - Japan's Kishida

Japan's Foreign Minister Kishida, while speaking in Hong Kong, cheered Abenomics, and called for the continuation of BOJ's easy monetary policy. 

Key Focus ahead

As we move out of a data-quiet thin Asian session, the traders eagerly await the EUR calendar, with the key focus on the UK employment data and CBI industrial order expectations release amid a data-empty EU docket. Markets are expecting the UK wage growth numbers to improve on a quarterly basis while the unemployment rate is expected to hold steady at 4.4% in the reported month.

In the NA session, we have the US current account and existing home sales data slated for release, followed by the US Energy Information Administration (EIA) crude inventories report due out at 1430 GMT. However, the main risk event for today remains the FOMC interest rate decision accompanied by the Summary of Economic Projections (SEP).

Today’s Fed rate decision is Fed Powell’s first as a Chairman and he is widely expected to announce a 25 bps hike in the Federal Funds rate while projecting four rate hikes this year in its DOT plot chart. Meanwhile, the SEP will be also closely eyed for any revisions to the inflation and growth outlook.

EUR/USD: Focus on Fed's dot plot and Powell presser

The EUR/USD may jump if Powell revises higher the short-term rate forecasts as expected and hikes rates by 25 basis points as expected.

GBP/USD: Unemployment, earnings to pop Sterling before Fed

The Sterling heads into Wednesday's action with the UK's Average Earnings, ILO Unemployment Rate, and Public Sector Net Borrowing in the barrel, all due at 09:30 GMT. 

UK Jobs Preview: Expect quarterly gain in employment of 85K – Capital Economics

Analysts at Capital Economic offer a sneak peek at what to expect from today’s UK labor market report due to be released at 0930 GMT.

FOMC Preview: Rate hike very likely, median dot to show 4 hikes in 2018 – Goldman Sachs

Goldman Sachs’ analysts are out with their expectations on today’s FOMC monetary policy outcome due at 1800 GMT, with the new Fed Chair Powell set to hike rates and show a more hawkish Fed dot chart.

Fed preview: Upward revision of 2019/20 interest rate forecast could yield USD rally

The Federal Open Markets Committee, under the leadership of Jerome Powell, is likely to raise interest rates by 25 basis points and reaffirm the plan to gradually reduce the size of its balance sheet.