The US dollar upward correction remained the key underlying theme in Asia, as the demand for the buck returned amid thin volumes and minimal volatility on the back of China New Year celebrations. The latest upmove in the buck was mainly driven by upbeat comments from the US President Trump on the US economy and rising shorter-duration Treasury yields. As a result, most majors ran through a fresh selling-wave, with the Yen worst hit, despite tumbling Japanese equity markets.
The Aussie witnessed good two-way price-movement, having found solid support at 0.7890 levels, despite slightly dovish RBA Fed meeting minutes and a broadly stronger USD, now heading back towards the 0.7950 barrier. Meanwhile, its OZ counterpart, the Kiwi, remained better offered, as the bulls were left unimpressed by upbeat NZ factory gate prices.
Main topics in Asia
RBA minutes: wage growth remained subdued
Minutes of the monetary policy meeting of the Reserve Bank of Australia board was released, and as widely expected, this was a non-market event …
Sources: UK has a secret plan to hold Brexit cash if EU refuses to trade - BBG
Bloomberg quoted three people familiar with the matter, citing that some senior British officials have privately discussed the idea of a fallback option that could be triggered if the Brexit negotiations go wrong.
Trump: “U.S. economy is looking very good, in my opinion”
The US President Donald Trump was out on the wires last minutes, via Twitter, talking up the US economic prospects.
Ex-BoJ’s Kiuchi: BoJ to gradually edge away from crisis-mode stimulus
Reuters reports comments delivered by the former BoJ board member Kiuchi late on Monday.
Key Focus ahead
Today’s EUR macro calendar remains relatively eventful, with the German PPI and Swiss trade figures to be released ahead of the European opening bells while the Eurozone and German ZEW economic surveys will keep the EUR, GBP traders busy in Europe. Also, the focus remains on the UK CBI industrial order expectations data, in absence of first-tier economic releases from the UK docket.
The NA session sees the releases of the Canadian wholesale sales, NZ GDT price index and Eurozone consumer confidence data amid a data-empty US calendar.
EUR/USD slinking towards 1.23 ahead of SPD vote, EU ZEW figures
The Euro has declined from recent highs as the US Dollar begins to stage a mild comeback following spikes in Treasury yields, with the 2-year Treasury note hitting 2.2% during the overnight session, the paper's highest figure since 2008.
GBP/USD: Bears target 1.3900, Brexit jitters back in play?
The bearish grip tightened on the GBP/USD pair in the Asian session, as the bears extended the overnight sell-off amid a pick-up in the USD strength and a non-event BOE Governor Carney’s speech.
DXY seen at 85.00 in a year’s time, a 5% fall from current levels – SG
Analysts at Societe Generale (SG) offer the currency forecasts in their weekly FX outlook report.
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