The sentiment across the fx board received a fresh lift after the US President Trump said that he feels the US-China trade talks will be successful. The resulting risk reset offered a big sigh of relief to the risk currencies such as the Antipodeans and the GBP while the safe-haven Yen slipped across the board. The USD/CNY rally also lost legs at 6.8800 levels.
The Kiwi emerged the top gainer amongst the G10 currencies and looked to regain the 0.66 handle. The next in line was the Aussie, as it bounced to 0.6960 despite mixed Australian NAB survey and negative gold prices. The USD/JPY pair also rebounded to 109.70 region, tracking the bounce in the US equity futures and Treasury yields across the curve. Meanwhile, the Loonie traded modestly flat near 1.3470 levels amid a bounce in oil prices and a broadly subdued US dollar.
Amongst the European currencies, the EUR/USD pair traded firmer but below the 1.1250 level while the Cable remained unmotivated below the 1.2970 barrier heading into the UK employment data.
Main Topics in Asia
US-China trade updates
Moody's warns consequences of a breakdown in US.-China trade talks
Trump: Will know in 3 to 4 weeks if China talks successful
Japan's Aso: US-China trade war won't be resolved easily
USD/CNH technical analysis: Rally stalls near 78.6% Fib
Other Headlines
Brent technical analysis: Looks south after bearish outside day
Australia NAB business survey comes in mixed for April, Aussie unfazed
BOJ’s Kuroda: BOJ needs to continue easing for a while
BOJ’s Kuroda: BOJ easing is for price target and not for financing debt
NZ FinMin Robertson: Brexit, trade war make environment unstable for NZ exporters
Asian stocks fall after China retaliates in trade war with US
Key Focus Ahead
Following a data-empty EUR calendar a day before, today European session remains a data-packed one, kicking-off with the German April final CPI and WPI figures at 0600 GMT. The Swiss producer and import prices data will be reported at 0630 GMT. At 0830 GMT, the UK labor market report will be polished, with the claimant counts for April likely to rise by 24.2k vs. +28.3k last while ILO jobless rate to hold steady at 3.9% in the reported month. The average hourly earnings (ex-bonuses) for 3m/y March are seen a tad lower at 3.3%. Moving on, the EUR traders look forward to the German ZEW survey and industrial figures that will drop in 0900 GMT.
In the NA session, in absence of first-tier macro news, the focus will be on the US import price index data and API weekly crude stocks report due at 1230 GMT and 2030 GMT respectively.
Besides data, the speeches by the following central bankers will be eyed amid U-China trade tensions and Brexit uncertainty.
- 0715 GMT: Fed’s Williams.
- 1645 GMT: Fed’s George.
EUR/USD reverses higher from 5-day MA despite trade tensions, eyes German Zew survey
EUR/USD has bounced up from the ascending (bullish) 5-day moving average (MA) ahead of the key German and Eurozone data releases.
GBP/USD: Bounce still remains capped by 1.2970 ahead of UK jobs
The GBP/USD pair continues to trade in a 30-pips narrow range heading into early European trading. Looking ahead, the UK jobs data may have limited impact on the spot, as the overall market sentiment will continue to remain the main driver amid trade risks and Brexit jitters.
UK jobs report preview: one upside risk, one downside risk, and the Brexit shadow
GBP/USD has room to rise on an upside surprise in wage growth, to the downside on a rise in the unemployment rate, and sideways as Brexit clarity is awaited as ever.
Australia: Expect little change in labor market conditions - NAB
The National Australia Bank (NAB) is out with a sneak peek at what to expect from Thursday’s Australian labor market report due at 0130 GMT.
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