Forex Today: Hong Kong bill reignites risk-off, Brexit, Fedspeak on traders’ radar

Hong Kong bill weighs on the odds of a successful trade deal between the US and China.

EU policymakers still undecided on the October 17 summit, UK PM Johnson jostles to gain support for the Brexit deal.

The UK CPI, the US Retail Sales, and comments from Federal Reserve policymakers will be additionally important.

Tuesday’s risk-on mood, mainly based on upbeat comments from China, failed to last long as the US House passing the Hong Kong Human Rights and Democracy Act teases Chinese Foreign Ministry and reignites fears of another trade war. The risk aversion wave gains support from uncertainty surrounding Brexit and rate cut from the Bank of Korea (BOK).

With this, the US 10-year Treasury yields restore earlier declines while flashing 1.75% as a quote whereas Asian stocks stay mixed amid signals of further policy easing from various central banks.

The trade-related risk weighs over the commodity-linked currencies wherein the New Zealand Dollar (NZD) failed to cheer upbeat prints of third quarter (Q3) Consumer Price Index (CPI) failed to please the Kiwi pair while below trend Westpac Leading Index for Australia further weakened the Aussie. In the same way, the Canadian Dollar (CAD) also weakened against the greenback.

Moving on, traditional safe-havens like the Swiss Franc (CHF), the Japanese Yen (JPY) and Gold benefits from the rush to fund-safety while the Euro (EUR) and the British Pound (GBP) struggle over Brexit issues.

Main Topics in Asia

BOK's Lee: Decision to cut rates was not unanimous - Bloomberg

PBOC to inject 200 billion Yuan via MLF

Bank of Korea cuts rates to 1.25%

China urges US to stop pushing Hong Kong-related bill

Fed’s Daly: US economy and policy accommodation 'in a good place' right now

New Zealand CPI came in better than expected, 0.7% QoQ & 1.5% YoY, Kiwi surges to 0.6320

US House passes bill aimed at supporting Hong Kong protests – Bloomberg

RBNZ's deputy governor: Lower rates may still be needed to achieve objectives

Fitch: China hard landing second most risk for Australia’s fixed income investors

Boris Johnson’s fledgling Brexit deal causes major split among Tory hardliners

Key Focus Ahead

Although there is no doubt that trade/Brexit news will be the key catalysts, Inflation data from the United Kingdom (UK), Eurozone and Canada could offer intermediate direction to the market. Additionally, comments from Federal Reserve Bank of Chicago President Charles Evans and Federal Reserve Governor Lael Brainard, coupled with the US Retail Sales will also add burden on market watchers’ shoulders.

EUR/USD stuck below 50-day MA ahead of US retail sales

EUR/USD remains stuck below the 50-day moving average despite Brexit optimism. A breakout could be seen if the US retail sales data prints below estimates.

GBP/USD: Above key hurdle for first since May on Brexit optimism

GBP/USD has crossed the 200-day average for the first time in five months. The breakout will likely be reversed if Brexit optimism fades. The EU and UK are closing on a draft deal, but the DUP is still playing hardball.

USD/CHF remains shy of 1.0000 amid latest risk aversion wave

The Swiss Franc (CHF) benefited from the US-China tussle over the Hong Kong bill. Uncertainty surrounding Brexit, doubts over global growth adds to the risk-off mood. US data, Fedspeak and trade/political headlines will be the key to follow.