The market mood remained cautious amid lingering US-China trade deal concerns and ongoing Hong Kong civil unrest. The US dollar, therefore, gained ground across its main competitors, except for the pound and shared currency. Meanwhile, the Asian equities traded broadly mixed amid negative sentiment seen around the Treasury yields and Wall Street futures. The safe-haven gold consolidated the latest declines amid a broadly firmer US dollar.
Across the G10 currencies, the Kiwi reversed Monday’s rally and fell sharply to two-day lows of 0.6326 after a drop in New Zealand’s inflation expectations bolstered RBNZ rate cut bets heading into Wednesday’s monetary policy decision. The AUD/USD pair traded up and down but largely unchanged around 0.6850 amid better NAB Business Survey and looming trade risks while USD/JPY consolidated the early gains to near 109.20 for the better part of the Asian trading. Meanwhile, both the Swiss franc and the Canadian dollar traded with mild losses. The recovery in oil prices, however, did help limit the upside in USD/CAD.
Main Topics in Asia
US Pres. Trump expected to delay auto tariff decision for 6 more months – Politico
Japan considering tax system changes to encourage M&A - Asahi
French Pres. Macron: Had an excellent phone conversation with US Pres. Trump
Australia NAB Business Survey unexpectedly improves in October
US urges China to honor commitments that Hong Kong will enjoy a high degree of autonomy
RBNZ Survey: New Zealand inflation expectations fall further in Q4
Hong Kong leader Lam: Protesters 'paralysing' the city are extremely selfish
PBOC Adviser Sheng: Urges for more pro-active fiscal policy and PBOC rate cuts
Japanese PM Abe: Want extra budget to assist economic recovery
Key Focus Ahead
The main event risk for today is likely to be the speech by the US President Trump at the Economic Club of New York, scheduled at 1700 GMT. Should he mention anything on the likely US-China trade deal, a big move across the financial markets cannot be ruled out, as traders are yearning for some fresh updates on the trade issue.
Also, in focus will remain the speeches by the Fed officials Clarida, Barkin, Harker and Kashkari for fresh insights into the US monetary policy outlook ahead of the Fed Chair Powell’s testimony due on Wednesday. Among other developments, the UK political drama will also continue to grab some market attention.
On the data front, the UK Jobs and Wage growth figures will keep the GBP traders at 0930 GMT. Meanwhile, the German ZEW Survey for November, due at 1000 GMT, could likely hog the limelight in the European session. The NA docket, in contrast, remains mostly data-light, as full trading returns after Monday’s holiday.
EUR/USD struggles below 50-DMA ahead of German ZEW, Trump
EUR/USD is seen moving back and forth in a 15-pips trading range around 1.1030 ahead of the European open, having faced rejection on several attempts to regain the 1.1050 level. Focus remains on the Germany ZEW Survey and US President Trump’s speech.
GBP/USD benefits from UK political plays ahead of jobs data
GBP/USD seesaws near-weekly high as increasing odds of the Tory leadership favor the bulls. Sluggish risk-tone and overall USD strength tame recovery around 21-day SMA. The UK jobs report, US President Trump’s comments and Fedspeak remain in the spotlight.
UK Jobs Outlook: Win-win situation for GBP/USD amid BOE forecasts, Farage
The UK jobs report for September is set to show ongoing strength. Concerns from the BOE set a low bar for an upside surprise. GBP/USD has room to advance, also thanks to optimism about the elections.
5 Biggest Risks for FX this Week
At this stage, few investors should be surprised by this back and forth as trade developments remain one of the greatest risk for FX trade this week.
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