Forex Today: Cautious amid US-China spat, focus shifts to US data

The renewed tensions between the US and China kept the risk tone broadly softer in the Asian trading this Thursday. The US President Trump signed an executive order on Wednesday, declaring a national emergency on information security and laying the ground for the US ban on China’s Huawei.

Therefore, forex today witnessed cautious trading, with the safe-have Yen keeping an upper edge over its American peer. The USD/JPY pair dropped to lows near 109.30 levels before having recovered to 109.50 region. The AUD/USD pair faced a double whammy, with risk-aversion on one hand while an uptick in the Australian jobless rate increased the odds of an RBA rate cut and pressured the Aussie on the other hand. The Kiwi was also offered and breached the 0.6550 level.

The resource—linked Loonie traded modestly flat below 1.3450, despite the gains in oil prices amid mounting US-Iran geopolitical tensions.  Meanwhile, gold futures on Comex were unfazed by ongoing trade concerns and kept its range below the 1300 mark.

Amongst the European currencies, the EUR/USD pair clung to the 1.12 handle, supported by the reports that the US President Trump delayed the decision on the auto tariffs on the EU. Meanwhile, the Cable faded the bounce to 1.2865 and treaded water near 1.2850 region ahead of the key meeting between the UK PM May and her party members that will decide her the fate as the UK Prime Minister.

Main Topics in Asia

US-China trade updates

Trump laying the ground for US ban on China’s Huawei -SCMP

US Commerce Department places China’s Huawei and 70 affiliates on trade blacklist - SCMP

China sells most U.S. Treasuries in nearly two-and-a-half years – Reuters

China’s Huawei: Ready and willing to engage with US government

Other Headlines

Iran Foreign Minister Zarif: we remain committed to Iran nuclear deal

Trump, frustrated by advisers, is not convinced the time is right to attack Iran - WP

WTI technical analysis: Momentum indicators aligned bullish with $63.05 on bull's radar

USD/IDR: Buyers dominate ahead of Bank Indonesia’s rate decision

A disappointing Australian Jobs Report

Australia’s 10-year bond yield hits record low

BOJ’s Wakatabe: Benefits of BOJ easing is outweighing its costs

Asian stocks trade mixed amid lingering trade tensions

Source: Japan’s Govt is considering revising down its economic assessment for May - Reuters

Key Focus Ahead

The EUR macro calendar for today remains fairly light, with nothing of note except for the second-tier Eurozone trade balance due at 0900 GMT. Meanwhile, the Indonesian central bank policy decision is due on the cards at 0730 GMT.

The focus shifts towards the NA calendar, with plenty of event risks, including the US Jobless Claims, Housing Starts, Building Permits and Philly Fed Manufacturing Index, all of which will be released at once at 1230 GMT. At the same time, the Canadian ADP Jobs and Manufacturing Sales data will grab some attention.

Apart from the macro releases, the speeches by the following central bankers will be also closely heard amid increasing risks to the global economy, in the wake of the US-China trade war.

• 0730 GMT: ECB’s Praet.
• 0815 GMT: ECB’s Weidmann.
• 1230 GMT: ECB’s De Guindos.
• 1515 GMT: BOC’s Poloz.
• 1615 GMT: Fed’s Brainard.
• 1730 GMT: BOE’s Haskel.
• 1800 GMT: ECB’s Coeure.

EUR/USD: Rising Italy-German bond yield spread may cap gains

With Italy-German bond yield differentials hitting multi-month highs, the EUR/USD pair may have a tough time cheering reports of Trump delaying the decision on auto tariffs.

GBP/USD sidelined near 1.2850 ahead of PM May-Tories meeting

The British Pound (GBP) recovered from a three-month low during early-day trading as investors expect the UK PM Theresa May’s Brexit plan to get through parliament in its fourth attempt. 

Gold technical analysis: Forms Doji on easing trade tensions, focus on today’s close

Gold created a doji candle on Wednesday, taking the shine off Monday bullish breakout. Acceptance below Doji’s low could prove costly.