Forex Today: Risk-off at full steam in Asia on US political uncertainties, UK Jobs eyed

Dhwani Mehta FXStreet

Forex today was driven by risk-off moods, fuelled by rising uncertainties surrounding Trump’s President, which boosted the demand for safe-havens such as the yen, CHF, gold etc., at the expense of the Asian equities, oil prices and treasury yields.

Most of the market analysts are attributing the prevalent risk-off sentiment to a story in the New York Times (NYT), after it revealed that the US President Trump disclosed classified information to the Russian diplomats. Further, risk-aversion intensified on the latest news from the NYT released earlier today, citing that the US President Donald Trump asked then-FBI Director James Comey in February to drop the investigation into former national security adviser Michael Flynn.

The US dollar was broadly sold-off into the US political disarray and increased doubts over Trump’s ability to deliver on his campaign promises of pushing reforms and stimulus programs, in a bid to make “America great again.”

Focus now shifts towards the fundamentals due on the cards today, with the UK employment data and Eurozone final CPI awaited from the EUR calendar, while the US docket remains data-empty, except for the US EIA crude inventories data. From Canada, we have the manufacturing sales data, which will provide some incentives to the North American traders.

Main topics in Asia

U.S. President Trump requested Comey in February to drop the investigation into Flynn - NYT

According to The New York Times, U.S. President Donald Trump asked then-FBI Director James Comey in February to drop the investigation into Michael Flynn.

House oversight committee chair demands Comey memo by May 24

Chairman of the House Oversight Committee Representative Jason Chaffetz has sent a letter to the FBI asking for all memoranda, notes, and recordings relating to communications between Comey and Trump by May 24.

Gold jumps to two-week high as S&P 500 futures slip on political uncertainty

The Comey memo is shaking things up this Wednesday morning in Asia. The S&P 500 futures dropped 14 points or 0.62%, while the safe haven gold clocked a two-week high of $1245.02 levels.

Australia’s wage price index held steady at 0.5% in Q1, meets expectations

The Australian wage price index remained unchanged at 0.5% in Q1, same as that booked in Q4, leaving the annual growth rate steady at 1.9% seen in Q4 and Q3 that were the slowest since the great recession.

Key Focus ahead

GBP/USD: Will it conquer 1.30 handle on an uptick in UK wages?

The bulls regain poise in mid-Asia, prompting a fresh buying-wave in the GBP/USDpair, in a bid to regain 1.2950 barrier amid persisting broad based US dollar weakness and risk-off market profile.

EUR/USD - ‘Relative political stability in the Eurozone’ supports further gains

EUR/USD extended the three-day winning streak in Asia to a high of 1.1115; its highest level since November 9.

What are the key event risks coming up? - Westpac

Analysts at Westpac offered the key event risks coming up

GMT	Event	Consensus	Previous
Wednesday, May 17
07:00	EUR Non-monetary policy's ECB meeting
08:30	GBP Claimant Count Rate		2.2%
08:30	GBP ILO Unemployment Rate (3M)	4.7%	4.7%
08:30	GBP Claimant Count Change	7.5K	25.5K
08:30	GBP Average Earnings including Bonus (3Mo/Yr)	2.4%	2.3%
08:30	GBP Average Earnings excluding Bonus (3Mo/Yr)	2.2%	2.2%
09:00	EUR Consumer Price Index (YoY)	1.9%	1.9%
09:00	EUR Consumer Price Index - Core (MoM)		1.4%
09:00	EUR Consumer Price Index - Core (YoY)	1.2%	1.2%
09:00	EUR Consumer Price Index (MoM)	0.4%	0.8%
09:00	EUR Construction Output w.d.a (YoY)		7.1%
09:00	EUR Construction Output s.a (MoM)		6.9%
11:00	USD MBA Mortgage Applications		2.4%
12:30	CAD Manufacturing Shipments (MoM)	1.0%	-0.2%
14:30	USD EIA Crude Oil Stocks change	-2.283M	-5.247M
Thursday, May 18
04:00	USD Fed's Bullard speech
08:30	GBP Retail Sales ex-Fuel (MoM)	1.0%	-1.5%
08:30	GBP Retail Sales ex-Fuel (YoY)	2.5%	2.6%
08:30	GBP Retail Sales (MoM)	1.0%	-1.8%
08:30	GBP Retail Sales (YoY)	2.0%	1.7%
11:30	EUR ECB Monetary Policy Meeting Accounts
12:30	USD Initial Jobless Claims	240K	236K
12:30	USD Continuing Jobless Claims	1.960M	1.918M
12:30	CAD Foreign portfolio investment in Canadian securities		$38.84B
12:30	CAD Canadian portfolio investment in foreign securities		$6.33B

Author

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.

AUD/USD remains confined in a range above 0.7100

AUD/USD extends its consolidative price move above 0.7100 through the Asian session on Tuesday, shrugging off hawkish comments from RBA Assistant Governor Sarah Hunter as traders keenly await the crucial Trump-Xi summit later this week. Meanwhile, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, capping spot prices.

USD/JPY bulls seem cautious below 157.50 as JPY intervention risks loom

USD/JPY consolidates below mid-157.00s during the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. At the same time, the US Dollar retains its bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, acting as a tailwind for the pair.

Gold benefits from falling US bond yields; remains below $4,400 amid bullish USD

Gold regains positive traction during the Asian session on Tuesday, though it lacks bullish conviction and remains below $4,400. Falling oil prices ease inflation fears, dragging US bond yields lower and supporting the non-yielding yellow metal. Meanwhile, the Fed's hawkish stance, along with escalating Middle East tensions, keeps the US Dollar near its highest level since late July and acts as a headwind for the bullion.

Ethereum rallies above $2,700 as investors shrug off bearish sentiment

Ethereum (ETH) climbed above $2,700 on Monday after investors defended the realized price level despite negative sentiment over the Clarity Act's failure and the Federal Reserve rate hike. After the Clarity Act failed to advance in the Senate, ETH dipped below $2,400 last week. But right below that price is the top altcoin's realized price, or average on-chain cost basis, at $2,310.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.