Forex Today: Market ignores China data, risk-tone follows trade/Brexit headlines, Saturday becomes the key


Following heavy volatility on the back of Brexit news, Forex Today takes a breather ahead of the European session on Friday. Traders shrug off China/Japan data amid a lack of major trade/Brexit news. However, doubts over the UK PM’s ability to get the recent Brexit deal through the Parliament and activation of the US tariffs on the EU goods compress risk sentiment. It should also be noted that Aussie, European and the US central bank policymakers kept flashing mixed messages in their latest appearances.

GBP/USD becomes the biggest loser, though only with 0.30% of loss, as investors doubt the United Kingdom (UK) Prime Minister’s (PM) ability to get the Parliamentary approval for his recent Brexit deal during Saturday’s special session. On the contrary, NZD/USD occupies the other extreme based on the three-month high Industrial Production and Retail Sales from China, not to mention caring less for sluggish Gross Domestic Product (GDP). Further, AUD/USD stays modestly changed as trade uncertainty joins mixed China data and the Reserve Bank of Australia’s (RBA) Governor’s comments reversing the previous optimism conveyed by the Deputy Governor.

EUR/USD fails to gain much from the European Central Bank (ECB) policymaker Klaas Knot’s upbeat comments whereas USD/JPY also defies soft Consumer Price Index (CPI) data from Japan. Gold offers little moves while Crude declines on the high stockpile, receding geopolitical tension. The US 10-year Treasury yield stands weak around 1.74% with Asian markets showing a lack of momentum.

Main Topics in Asia

Japan's Finance Minister Aso: Will take fiscal measures when needed

Japan's government: US-Japan trade deal to boost Japan's GDP by 0.8%

China's Stats Bureau: Economy faces relatively big downward pressure

China's GDP growth slows to 6% in Q3 while Industrial Production betters estimates, AUD keeps gains

Reuters poll: ECB will cut the deposit rate to -0.60% in Quarter 1 2020 (vs A4 2019 in Sept poll).

Japan Sep inflation: Headline CPI 0.2% y/y (vs. expected 0.2% & prior 0.3%)

Fed's Williams: The economy is in a ‘pretty good place’

ECB’s Knot: On balance, effects of negative rates have been positive

 Key Focus Ahead

While major market attention is given to Saturday’s special UK Parliamentary session, where the UK PM Boris Johnson requires 320 votes to achieve his Brexit goal, Fedspeak before the blackout period and comments from the Bank of Canada (BOC) policymaker will offer intermediate trading moves. Comments from Robert Kaplan, Esther George, and the Vice-Chair Richard Clarida will be weighed with recently downbeat US data while BOC’s Lane will be observed for any upbeat remarks after Thursday’s Canadian statistics dragged the USD/CAD pair down.

Additionally, any Brexit/trade related comments from the on-going International Monetary Fund (IMF) meeting and the European Union (EU) summit will not be underestimated amid a light economic calendar.

EUR/USD: Probing 100-day average, focus on Brexit

EUR/USD's rally seems to have stalled near the 100-day average hurdle.  UK's Prime Minister Johnson faced an uphill battle to pass Brexit deal in parliament. Brexit uncertainty and dismal China may keep the EUR below the 100-day average. 

GBP/USD under pressure ahead of Super Saturday

GBP/USD is reporting losses at press time, having hit a five-month high on Thursday.  Britain's parliament will vote on the new Brexit deal on Saturday. Prime Minister Johnson lacks the support of the Northern Irish Ally.

USD/JPY: Bulls in the driver's seat looking to the 200-DMA

USD/JPY is currently trading in the 108.60s in a tight spot and touch away from the 200-day moving average as risk appetite kicks in again.

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