Forex Today: Risk-off returns as US-China trade war intensifies; Eurozone CPI eyed


Fresh US-China trade tensions crept into the Asian trading and hit the risk sentiment across the fx board, rescuing the JPY bulls. The safe-haven demand for the Japanese currency was boosted after latest reports from the Chinese media cited that China is no longer interest in the trade talks with the US and would rather suspend the ongoing negotiations on lack of sincerity from the US.  

The USD/JPY pair reversed a temporary break above the 110 handle and returned to the red zone in tandem with S&P 500 futures. The spot headed back towards the 109.50 level as a flight to safety re-emerged. The AUD/USD pair refreshed the lowest levels since January’s flash crash near 0.6880 and consolidated at lower levels ahead of Saturday’s Australian general elections. . The Kiwi traded unmotivated near 0.6540 region amid a retreat in oil prices and mixed Asian equities. Meanwhile, gold futures on Comex traded modestly flat near 1286, having found support from the renewed trade spat.

Amongst the European currencies, the EUR/USD pair was better bid but below the 1.12 handle while the Cable remained on the defensive around the 1.2800 level amid UK political uncertainty.

Main Topics in Asia

US-China trade updates

USD/CNH technical analysis: Offshore yuan hits lowest since Nov. 30

Japan’s Asakawa: Japan won't intervene to seek solution to US-China trade frictions

China NDRC: Trade friction’s impact on Chinese economy is under control

US-China trade war will only make us stronger - China’s People’s Daily

China has little interest in trade talks for now - Xinhua

China said to rather suspend trade negotiations if US fails to show sincerity - SCMP

Other Headlines

Gold technical analysis: Prior trendline resistance acts as support

Japan's Aso: Increasing money supply does not equal more demand

Lira tumbles as US terminates Turkey's preferential trade treatment

WTI is on the bids near $63.30 as 21-day SMA holds the strength intact amid fewer catalysts

Asian stocks struggle to follow Wall Street gains

BOJ’s Kuroda: Must maintain low rates for long period to meet price target

Talks between Tories and Labour set to close with no deal – BBC

Key Focus Ahead

There is nothing much of note, in terms of macro news, in today’s European calendar, except for the Eurozone final CPI and construction output data due at 0900 GMT. Meanwhile, the UK docket remains data-empty and hence, all eyes are focussed on the UK cross-party Brexit talks that are expected to be closed today and probably without reaching a deal.

In the NA session, the US UoM preliminary consumer sentiment data, due at 1400 GMT, will remain the key focus. At 1700 GMT, oil traders will look forward to the US rigs count data due to be published by Baker and Hughes oilfield services company.

Apart from the macro releases, the speeches by the following central bankers will be also closely heard amid escalating US-China trade tensions.

  • 1740 GMT: Fed’s Clarida.
  • 1800 GMT: Fed’s Williams.

Heading into the weekend, Saturday’s Australian general election will also remain in the spotlight for the Aussie traders while Japanese Q1 GDP report due on Sunday will also influence the Yen pairs next week.

EUR/USD: Downside risks grow on fears of US-China trade talks falling apart

EUR/USD is on the back foot, having breached key ascending trendline support on Thursday and risks falling to levels below 1.1150 as risky assets are taking a hit on reports stating that China is no longer interested in trade talks with the US.

GBP/USD remains stable near 1.2790, all eyes on cross-party Brexit talks

Having known the UK PM May’s intention to provide a timetable of her resignation and who could succeed her, the GBP/USD traders remain less active around 1.2790 while heading into the London open on Friday.

Michigan Consumer Sentiment Preview: Growth, jobs and sentiment

The Consumer Sentiment Index is expected to rise to 97.5 in May from 97.2 in April. The Current Conditions Index is predicted to edge lower to 112.2 from 112.3 in April. The Expectations Index will drop to 86.8 in May from 87.4 

GMT
Event
Vol.
Actual
Consensus
Previous
Thursday, May 16
24h
 
 
Friday, May 17
04:30
 
-0.4%
-0.6%
09:00
 
0.7%
1.0%
09:00
 
1.2%
1.2%
09:00
 
1.7%
1.7%
09:00
 
0.9%
0.9% Revised from 1.0%
09:00
 
1.8%
5.2%
09:00
 
-0.80%
2.96%
14:00
 
97.5
97.2
17:00
 
 
805
17:40
 
 
18:00
 
 
19:30
 
 
494.3K
19:30
 
 
$75.4K
19:30
 
 
$96.1K
19:30
 
 
£-6.9K
19:30
 
 
¥-91.7K
19:30
 
 
€-106.1K
19:30
 
 
$-57K
Saturday, May 18
24h
 
 
Sunday, May 19
23:50
 
0.0%
0.5%
23:50
 
0.3%
-0.3%
23:50
 
-0.2%
1.9%
Monday, May 20
24h
 
 
04:30
 
-0.9%
-0.9%
04:30
 
-4.6%
-4.6%

 

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