Forex today witnessed a turnaround in the risk sentiment amid the recent reports over the US-China trade progress. The renewed risk-aversion wave crimped the USD rally and sent it lower across the board, boosting the sentiment around its major rivals. The Pound was the early mover and the biggest gainer in Asia, following the reports that the Northern Irish DUP will conditionally back the UK PM May’s Plan B Brexit deal. The GBP/USD pair rallied the best levels seen since November 2018 near 1.3140. The common currency also corrected dovish-ECB led sell-off and traded near 1.1325 region.
Amongst the Asia-pac currencies, the Aussie staged a solid comeback from three-week lows and retested the 0.71 handle while the Kiwi also rebounded to 0.6780 levels. The USD/JPY pair bounced-off lows near 109.50 and headed back towards 110.00, as the JPY bulls were offered a little reprieve from upbeat Tokyo core CPI figures.
On the commodities front, both crude benchmarks jumped over 1% amid Venezuela sanctions risks and US crude inventory drawdown while gold futures on Comex was better bid near 1282 region, unfazed by positive Treasury yields.
Main Topics in Asia
Internal document: White House prepares draft national emergency order - CNN
House Speaker Pelosi: No funds for wall, down payment a 'nonstarter'
Trump: If the US can make deal with China would be great
DUP decides privately to support May's deal next week, GBP/USD jumps to 1.3130
Irish Central Bank: Disorderly Brexit could lower 2019 GDP growth to 1.5%
White House Advisor Kudlow: Trade talks must deal with IP and technology issues
Global economy in real danger if US-China trade war escalates - Reuters poll
UK rules out proposed online sales tax - The Times
US should restrict trade war to China - Soros
Asian stocks advance amid conflicting signals over US-China trade talks
Key Focus Ahead
After an eventful EUR calendar a day before, Friday’s session remains relatively light, with markets bracing for the German IFO survey at 0900 GMT, followed by the UK BBA mortgage approvals and CBI realized sales report due at 0930 GMT and 1100GMT respectively. The NA also has no significant macro updates on the cards from the US and Canada and hence, the US-China trade talks and Brexit developments will continue to drive the broader market sentiment.
Meanwhile, the NA traders may receive some trading incentives from the Baker Hughes oil rigs count data at 1800 GMT and the monthly budget statement release at 1900 GMT.
EUR/USD: Bears in control after ECB
Dovish Draghi has likely put the EUR/USD pair on the path to a sustained break below 1.13. On Thursday, the European Central Bank (ECB) kept key rates and forward guidance unchanged but downgraded its assessment.
GBP/USD: Bulls headed to 1.3150 amid hopes for May's new Brexit plan
The buying interest around the pound remains unabated, pushing the GBP/USD pair back towards the midpoint of the 1.31 handle as we head towards the early European trading.
Gold Technical Analysis: re-test of weekly highs near $1,286 likely
Gold could revisit the high of $1,286 hit earlier this week, as the repeated bounce from sub-$1,280 may have weakened the bearish view put forward by the contracting triangle breakdown.
Australia: Headline inflation to rise by 0.4% q/q in Q4 2018 - ANZ
Analysts at Australia and New Zealand Banking Group (ANZ) see the Australian consumer prices decelerating over the year in the fourth quarter of 2018 amid a sharp drop in fuel prices.
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