Forex Today: Firmer Yuan buoys the Aussie; UK jobs in spotlight

FX today witnessed a quiet Asian affair amid a risk-on action in the Asian equities and limited macro news. However, the most majors stuck to thin trading ranges on looming US-China trade conflict and a broadly subdued US dollar.

The Kiwi was the main laggard for the second straight session and gave up 0.66 handle yet again while the Aussie traded on the backfoot just ahead of the 0.6950 support amid mixed Australian NAB survey, stronger Yuan and higher commodities’ prices. The USD/CNY pair pulled back from YTD highs of 6.9358 and traded weaker near 6.9160 levels, as the PBOC unexpectedly set a stronger Yuan fix. The USD/JPY pair held onto the gains above the 200-hourly SMA, as markets continued to cheer the US-Mexico trade progress. But the further upside remained capped in response to mounting US economic risks and Fed rate cut expectations. Meanwhile, both the European currency pairs, EUR/USD and Cable traded modestly flat amid a lack of fresh catalysts.

Amongst the commodities, both crude benchmarks edged higher ahead of the US weekly supply reports while gold futures on Comex traded little changed below 1330 levels amid higher Treasury yields.

Main Topics in Asia

US Pres. Trump discusses fear China is ‘getting way ahead’ – South China Morning Post

Boris Johnson leads 92 Group Hustings’ non-binding vote to gauge candidates support

Japan's PM Abe unlikely to call double election, ruling out delay in tax hike - Nikkei Asian Review

Current oil demand does not warrant extension of OPEC+ cuts or exit - Goldman Sachs

Australia NAB business survey comes in mixed for May, Aussie unmoved

Japan’s Suga: PM Abe to visit Iran from June 12-14

Chinese firms fear of less welcoming US business environment due to trade frictions - CGCC survey

Pompeo to visit Japan, S. Korea on denuclearization in late June - Xinhua

Asian stocks rise despite lingering US-China trade issues

AUD Bullish: Dalian iron ore jumps over 4% on supply risks

China to cut gasoline prices in a bid to boost business and consumer spending

Gold seesaws near $1329 amid changing risk sentiment

NZ AgricultureMin O'Connor: Govt considering a conditional ban on the live export of cattle

WTI aims again for 3-week old resistance as US-Iran tussle remains in play

Key Focus Ahead

Markets gear up for yet another data-light EU session on Tuesday, as the UK labor market report is likely to headline amid a lack of first-tier macro news from the Euroland. However, the EUR, GBP traders will await the release of the Sentix Investor Confidence numbers, due at 0830 GMT for some trading impulse. The UK jobs data will be also published at 0830 GMT, with the average earning expected to be the key focus while the ILO jobless rate for April is seen edging higher to 3.9% vs. 3.8% previous.        

The NA session also is a thin showing, with the US Producer Price Index (PPI), the only release of note due at 1230 GMT. Next of relevance remains the US API weekly crude stocks data that will drop in at 2130 GMT. Further, the focus will also remain on the US-China trade war-related headlines and UK political developments for any cues on the market sentiment.

EUR/USD: US-DE yield differential hits 18-month low, will EUR break above 200-day MA?

The narrowing US-German bond yield differentials indicate the path of least resistance for the EUR/USD pair is on the higher side. Two-year US-German (DE) yield spread hits lowest since December 2017. 

GBP/USD: Sellers maintain the hold amid political uncertainty, all eyes on UK jobs data

Fears of hard Brexit and latest disappointment from British economics compress the GBP/USD pair while waiting for the UK employment data ahead of the London open on Tuesday.

UK jobs preview: Another bitter disappointment may find a vulnerable GBP

Economists expect the unemployment rate to rise from the historic low of 3.8% in March to 3.9% in April, but that may be too optimistic – as the drop in output may have already triggered a substantial loss of jobs. 

3 Reasons Why USDJPY is Headed Lower

The US dollar benefitted the most because next to Mexico, the threat to the US economy or corporate earnings was the greatest risk. While this deal eases concerns about the US economy's second half performance, we believe that the dollar will fall further in the coming days and weeks.