Cautious optimism emerged as the main underlying theme in Thursday’s Asian session, despite the conclusion of the historic US-China phase one trade deal. Markets remained on the edge as a number of conflicting issues are stiff left unresolved, including the structural economic issues. Also, they remained skeptical of the phase two deal, especially with the US presidential election scheduled later in November.
As markets re-assessed the trade deal, the US dollar kept its range nearly weekly lows across its main competitors. The Kiwi outperformed amid better New Zealand’s fundamentals that led the gains in most Asian currencies. The Chinese yuan eased from a six-month high vs. the US dollar but held onto minor gains near 6.8870 region.
Meanwhile, the Aussie defended the 0.69 handle, having drawn support from higher oil and gold prices. The USD/JPY pair was trapped in a tight range just below 110.00 despite the gains in the S&P 500 futures and Treasury yields. Mixed trading in the Asian equities and solid Japanese Machinery Orders data underpinned the yen.
Among the European currencies, EUR/USD consolidated around the midpoint of the 1.11 handle, slightly off the weekly highs while GBP/USD extended the early gains to regain 1.3050 amid Brexit optimism. USD/CHF traded modestly flat below 0.9650, divided between a broadly subdued US dollar and reduced demand for a safe-haven.
Main Topics in Asia
NZ: Monthly Inflation Gauge surged 0.4% in December – ANZ
Japan’s Manufacturers Index seen steady at -6 in January – Reuters Tankan
US VP Pence: Already begun discussions on Phase-two deal – FBN
SNB can leverage its balance sheet if needed, Schlegel says
Chinese VP Liu He: China 2019 growth projected to be above 6% - Xinhua
US-China phase one trade deal still carries three risks - FT
China’s Finance Ministry issues statement on phase one trade deal with the US
USD/IDR bounces off 23-month highs at 16,320
PBOC: Will strengthen financial supervision and prevent risks in financial opening process
Sources: India plans new law to protect foreign investment - Reuters
Key Focus Ahead
As the dust settles over the phase one trade deal, the attention now turns towards the macroeconomic releases for near-term trading opportunities. Therefore, the immediate focus now turns to the German Final Consumer Price Index (CPI) due at 0700 GMT. Later in the EU session, the Turkish central bank rate decision and the European Central Bank (ECB) monetary policy meeting’s accounts will grab some attention.
The main event risk, however, remains the US Retail Sales data for December due at 1330 GMT alongside the weekly Jobless Claims and Canadian ADP Employment Change numbers. Also, of relevance remains the speeches by the Fed official Bowman and ECB President Lagarde, scheduled at 1500 GMT and 1800 GMT respectively.
EUR/USD hovering near-weekly peak, eyes US Retail Sales
EUR/USD remains mildly bid near 1.1150 heading into the European trading this Thursday. The upside is favored if treasury yields extend Wednesday's drop. Later in the day, the focus will be on US Retail Sales release.
GBP/USD registers three-day winning streak amid Brexit drama
GBP/USD keeps its bid tone intact near 1.3050 ahead of the London open on Thursday. The pair benefits from the US dollar (USD) weakness and ignores downbeat UK fundamentals that boosted the odds for a BOE rate cut and negated the Brexit optimism.
US Retail Sales December Preview: ‘Twas the month after Christmas
The US Retail sales expected to have the best holidays in three years. Control group sales a GDP component predicted to rise 0.4%. Labor market continues to foster robust consumer sentiment.
China Fourth Quarter GDP Preview: Q4 is an afterthought
China’s growth expected to be unchanged at the modern-era low. US trade deal should boost the mainland economy in the first half.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.