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Forex Today: Kiwi dives on RBNZ dovish shift, all eyes on Brexit indicative votes

Moderate risk-aversion and Reserve Bank of New Zealand’s dovish signal were the main themes in Wednesday’s Asian trading that triggered some volatility across the fx space. The Kiwi got battered and dropped more than a big figure just below the 0.68 handle, as the RBNZ monetary policy statement flagged a November rate cut. The Aussie tracked the sharp sell-off in its OZ peer and breached the 0.7100 support while terrible Chinese industrial profits data also weighed heavily on the risk asset.

Meanwhile, the USD/JPY pair maintained its range trade around the 110 handle, little impressed by the fresh advance in the US dollar index amid subdued trading activity in the Treasury yields and mixed Asian equities. Both the pound and the Euro remained under pressure ahead of the parliamentary Brexit votes and the European Central Bank (ECB) President Draghi’s speech.

On the commodities front, both crude benchmarks traded modestly flat, with WTI hovering near the 60 mark, with the upside capped by the API stock build. Meanwhile, gold prices on Comex remained sidelined near 1320 levels, awaiting fresh catalysts. 

Main Topics in Asia

WTI: Buyers remain present despite API stock build

China business activity recovering thanks to "credit-soaked" quarter - CBB Survey

Trump’s Fed nominee suggests immediate 50 bps rate-cut

Brexit turmoil hits UK firms' hiring and investment plans - REC survey

RBNZ holds at 1.75%, but 'Next rate move is likely down' sends NZD/USD down

New Zealand 10-year bond yield hits record low

Overnight index swaps now see 71% chance of RBNZ rate cut in August - Bloomberg

China's industrial profits shrink most since late 2011 - Reuters

USD/CNH recovers losses on dismal China data

Asian stocks show mixed results as traders doubt global economic strength

Key Focus Ahead

After a volatile Asian session, markets look forward to the EU session that remains a thin-showing in terms of the economic releases, but a plethora of speeches by the ECB policymakers may keep the EUR, GBP traders busy amid the release of the UK CBI realized sales data due at 1100 GMT.

The NA session is relatively eventful, with the US and Canadian trade report due on the cards at 1230 GMT, followed by the US EIA weekly crude stockpiles data at 1430 GMT and US Q4 current account figures dropping in at 1500 GMT. However, a slew of Brexit indicative votes by the UK lawmakers scheduled at 1930 GMT is likely to hog the limelight today, as markets eagerly await some clarity on the Brexit issue heading closer towards the extended April 12th deadline.

Following is the list of the central bankers' speeches scheduled in the day ahead:

0800 GMT - ECB President Draghi

0800 GMT - ECB's Nowotny

0845 GMT - ECB's Praet

1000 GMT - ECB's Lautenschlaeger

1045 GMT - ECB's de Guindos

1330 GMT - ECB's Mersch

1730 GMT - ECB's Villeroy

2130 GMT – Fed’s George

EUR/USD: On defensive below 61.8% Fib ahead of Draghi speech, US-DE yield differential could be bottoming out

EUR/USD is on the defensive, having closed below 1.1280 (61.8% Fib R of 1.1176/1.1448) yesterday and the spread between the US and German 10-year bond yields is flashing early signs of bullish reversal ahead of the European Central Bank (ECB) President Draghi's speech. 

GBP/USD slips below 1.3200 ahead of UK parliamentary Brexit vote

Doubts over the future Brexit proceedings weigh on the GBP/USD amid greenback’s safe haven demand. The 50-day SMA can offer strong support while 1.3380 likely being the crucial resistance.

Gold Technical Analysis: Sidelined near $1,315 with bear flag on hourly, focus on today's close

The probability of gold closing below $1,312 would rise if the bear flag seen in the hourly chart is breached to the downside. That bearish continuation usually accelerates the preceding bearish move. 

#1: Parliament Did Not Take Control of Brexit #2: Radical Plan For Tories

The UK parliament cannot wrest control of Brexit against May's will. The Tories may have a small window of opportunity if they agree to change the rules, then quickly act on it.

GMT
Event
Vol.
Actual
Consensus
Previous
Thursday, Mar 21
24h
 
 
24h
 
 
Wednesday, Mar 27
08:00
 
 
08:45
 
 
09:00
 
 
-16.6
10:00
 
 
n/a
 
 
0.12%
10:45
 
 
11:00
 
 
1.6%
11:00
 
5%
0%
12:30
 
$-57.0B
$-59.8B
12:30
 
 
$-80.39B Revised from $-79.49B
12:30
 
$-3.50B
$-4.59B
12:30
 
 
$46.31B
12:30
 
$50.51B
$50.90B
13:30
 
 
14:00
 
 
14:30
 
0.309M
-9.589M
15:00
 
$-130.0B
$-124.8B
18:00
 
 
2.489%
19:30
 
 
21:30
 
 
23:50
 
 
¥-571.6B
23:50
 
 
¥-1,588.9B
Thursday, Mar 28
00:00
 
11.8%
10.5%
00:00
 
-24.3
-30.9
07:00
 
0.0%
-0.1%

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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