Forex Today: Post-NFP USD correction extends, ECB Draghi in spotlight

Mixed sentiment prevailed in Asia, as the Asian traders digested Friday’s US jobs report and resorted to fresh USD selling across the board, further fueling the correction in the USD index. As a result, the Aussie gained the most in the Asian session alongside safe-havens such as the Yen, Swiss franc and gold.

Attention now turns towards a Big Week ahead, with plenty of risk events in stored for the markets, including the central banks’ policy decisions – FOMC, BOJ, BOE and SNB and speculations surrounding Article 50 trigger. Also, a host of key economic data from across the globe will be closely eyed. Meanwhile, the day ahead holds the ECB President Draghi’s speech and US Labour Market Conditions Index m/m (LMCI) data.

Main topics in Asia       

Mnuchin to communicate zero tolerance policy against currency devaluation

As per Bloomberg report, US Treasury Secretary Mnuchin, in his debut appearance at G-20, is all set to talk about the zero tolerance policy against currency devaluation. 

Australia’s Morrison: Biggest worry about economy is low wage growth

The Australian Treasurer Scott Morrison crossed the wires last minutes, speaking in a Bloomberg TV interview.

Sources: Wrong for markets to start factoring in an early BOJ rate hike - RTRS

Reuters quotes sources familiar with the BOJ's thinking, noting that is expected to keep monetary policy steady on Thursday and stress that inflation is nowhere near levels that justify talk of withdrawing massive stimulus.

Goldman Sachs upgrades China equities to Overweight

Strategists at Goldman Sachs are more bullish on the Chinese equity markets, and raise their outlook on the Chinese equities to Overweight in its latest report.

Key focus for the week ahead                                                  

Fed can hike this week - Nomura

Analysts at Nomura explained that they expect the FOMC to increase the federal funds target to 0.75-1.00% at the conclusion of their next meeting. 

EUR/USD sits at monthly highs above 1.0700, ECB Draghi eyed

Later today, the major will continue to get influenced by the USD dynamics ahead of the ECB Draghi’s speech and US Labor market conditions data.

A correction in the dollar has begun - BBH

Analysts at Brown Brothers Harriman explained that bringing forward expectations of a Fed hike from May-June to March was worth something for the dollar, but to get more now, the market may need to recognize the risk of three (or more) hikes this year.  

Emerging Markets: Preview of the Week Ahead

EM FX ended last week on a firm note despite the strong US jobs data, with the dollar succumbing to some “buy the rumor, sell the fact” price action.