Forex Today: GBP unfazed by EU’s “Flextension”, eyes on cross-party Brexit talks

Forex today breathed a sigh of relief in Thursday’s Asian trading, as the dust settled over the Super Wednesday aftermath that offered no new surprises. The FOMC minutes underscored the Fed’s patience stance while the ECB reiterated that risks to the economy remain skewed to the downside. 

Meanwhile, on the Brexit front, the EU struck a final accord and offered a flexible Brexit deadline extension until Oct 31^st to the UK, leaving doors open for an early exit if the PM May manages to clinch a Brexit deal. The Cable showed little reaction to the Brexit-related developments and circled around the 1.31 handle, as markets look forward to the UK cross-party Brexit talks for fresh directives. The EUR/USD pair also held onto the higher levels below the 1.13 handle amid broad-based USD weakness.

Among the Asia-pac currencies, the Aussie extended its correction from 2-month tops and tested the 0.7150 support amid risk-aversion and mixed Chinese inflation data while weaker oil prices kept the bounce in the Loonie and the Kiwi limited.  USD/JPY wavered in a 20-pips tight range around the 111 level amid negative Asian stocks and Treasury yields, as global growth concerns and US-EU trade war risks dented investors’ sentiment.

Main Topics in Asia

NK's Kim Jong Un says needs to deliver a serious blow to those imposing sanctions - YNA

Australian Prime Minister to call the election - Sky News

Sources: EU leaders agree Brexit delay until October – Reuters

Brexit update: Tusk said EU agree on extension - 31st Oct

Brexit update: Some minor changes are being made to the extension plan

Brexit: Junker/ Tusk & May Presser Q&As - The Guardian

China March CPI 2.3% y/y (expected 2.4%) and PPI 0.4% y/y (expected 0.4%)

Gold Technical Analysis: Bulls perking up and look to test the trend-line resistance

RBA’s Debelle made no comments on monetary policy or economy

US Pres. Trump: EU - a brutal trading partner with the US - Twitter

Report: US-China trade war is rerouting US import flows - Reuters

Key Focus Ahead

After a busy macro calendar a day before, Thursday remains a thin-showing, with nothing much of relevance from the Euroland except for the German final CPI figures, which are likely to have limited impact on the EUR trades. Meanwhile, the UK docket remains data-empty and hence, the GBP traders eagerly await the outcome of the round 2 of the UK cross-party Brexit talks due later today.

Meanwhile, in the NA session, the US PPI numbers, due at 1230 GMT, will headline alongside the releases of the US weekly jobless claims and the Canadian new housing price index.

Besides the macro news, a bevy of global central bankers will be up on the rostrum later today, with the Fedspeaks likely to hog the limelight.

1330 GMT: Fed’s Clarida

Around 1330 GMT Fed’s Williams

1340 GMT: Fed’s Bullard

1700 GMT: BOC’s Wilkins

2000 GMT: Fed’s Bowman

Fed’s Kashkari

EUR/USD firmer, testing weekly highs near 1.1280

The shared currency has recovered the ground lost post-ECB meeting and is now helping EUR/USD to return to the upper end of the range in the 1.1280/5 band.

GBP/USD clings to 50-day SMA, Brexit extension shifts focus to cross-party talks

GBP/USD holds tightly to the 50-day SMA around 1.3100 ahead of the London open on Thursday. The Cable initially took advantage of the EU summit outcome that offered Brexit deadline extension. However, uncertainty surrounding the UK cross-party talks still cap the upside.

Gold Technical Analysis: Bulls perking up and look to test the trend-line resistance

A third test of the key trendline resistance ahead could be on the cards. This level is above the 13 March highs around 1311. A subsequent break of 1311 brings in the 78.6% Fibo of the prior swing high's (25 March) decent.