- The market remains risk-averse amid gloomy outlook for Brexit, US-China trade deal.
- Oil prices stay on the back foot amid rising doubts on global economic growth.
- China says the US playing “good cop-bad cop” ahead of November talks.
While a lack of major data/events keep markets focused on the trade/Brexit headlines, doubts over global economic strength extend the US Dollar’s (USD) positive momentum on early Friday. China termed the US Vice President Mike Pence’s criticism of Chinese human rights records and support for Hong Kong as playing “good cop-bad cop” ahead of the key trade summit in Chile, up for early November.
Further, Reuters’ poll of economists suggests global economic growth in 2020 to decline below the International Monetary Fund’s (IMF) latest downgraded forecast of 3.4% to 3.1%. Also spreading pessimism during the Asian session was the news that global rating agency Fitch slashed India’s 2019/20 growth to be at the six-year low of 5.5%.
With this, Oil prices have an additional reason, other than receding geopolitical tension and likely increase in the global supply, mainly supported by the United States (US) and Saudi Arabia, to extend the latest declines.
On the currency front, the Euro (EUR) keep the losses backed by the European Central Bank’s (ECB) downbeat assessment while the British Pound (GBP) hold onto declines as traders doubt British Prime Minister’s (PM) ability to break more than three-year-old Brexit deadlock. Moving on, Antipodeans have fewer catalysts to question the recent weakness while the Japanese Yen (JPY) and Gold have to bear the burden of the USD strength.
Main Topics in Asia
Fitch slashes India's growth outlook to 6-year low - Indian Express
Deeper global slowdown likely despite a round of rate cuts - Reuters Poll
USD/JPY risk reversals hit three-month highs on call demand
Key Focus Ahead
Except for the German Consumer Confidence and IFO numbers, the European and the UK session are likely to keep the market focus on the trade/Brexit headlines. During the United States’ (US) session, Michigan Consumer Sentiment Index may entertain investors.
While no major data/event is up for publishing, speculations surrounding the European Union’s (EU) response to the Brexit extension and the UK Parliamentary process on the PM’s snap election motion will entertain markets ahead of the key week. It should also be noted that the US Defence Secretary recently criticized Turkey’s Syrian invasion and might trigger the pullback in oil prices during the later part of the day.
EUR/USD: On the defensive, eyes German IFO
EUR/USD created a bearish candlestick pattern on Thursday. A drop to key support at 1.1170 could be in the offing. The bulls need the forward-looking German IFO Expectations Index to beat estimates.
GBP/USD: Sterling may remain depressed due to UK political uncertainty
Doubts over Brexit likely to keep GBP/USD under pressure. EU is likely to grant a three-month extension, but the decision may not come on Friday. UK PM calls for a snap election, opposition rejects the election offer.
USD/JPY: Brexit fray and Chinese risk on the cards, Yen supportive
200-DMA caps bullish progress as geopolitics remain in the driving seat - (Yen bullish). Brexit is up in the air and China may well respond in kind to US VP Pence's antagonistic comments - (Yen bullish)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD eases toward 0.6500 after mixed Australian trade data
AUD/USD is seeing some fresh selling interest in the Asian session on Thursday, following the release of mixed Australian trade data. The pair has stalled its recovery mode, as the US Dollar attempts a bounce after the Fed-led sell-off.
USD/JPY holds rebound near 156.00 after probable Japan's intervention-led crash
USD/JPY consolidates the rebound near 156.00, having lost nearly 450 pips in some minutes after the Japanese Yen rallied hard on another suspected Japan FX market intervention in the late American session on Wednesday.
Gold price stalls rebound below $2,330 as US Dollar recovers
Gold price is holding the rebound below $2,330 in Asian trading on Thursday, as the US Dollar recovers in sync with the USD/JPY pair and the US Treasury bond yields, in the aftermath of the Fed decision and the likely Japanese FX intervention.
Top 3 Price Prediction BTC, ETH, XRP: Altcoins to pump once BTC bottoms out, slow grind up for now
Bitcoin reclaiming above $59,200 would hint that BTC has already bottomed out, setting the tone for a run north. Ethereum holding above $2,900 keeps a bullish reversal pattern viable despite falling momentum. Ripple coils up for a move north as XRP bulls defend $0.5000.
The FOMC whipsaw and more Yen intervention in focus
Market participants clung to every word uttered by Chair Powell as risk assets whipped around in a frenetic fashion during the afternoon US trading session.