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Forex Today: Risk-on amid US-China trade optimism; UK construction PMI – Up next

The US-China trade deal hopes induced optimism boosted risk-sentiment across Asia on the first trading day of the week, as traders cheered the recent WSJ report. Across the fx board, the risk-on action in the Asian equities combined with the US President Trump’s currency jawboning left the US dollar broadly lower.

Amongst the G10 currencies, the Pound was the top gainer amid increased odds for a Brexit delay, followed by the Antipodeans that cheered the upsurge in the Chinese stocks and higher commodities prices while markets digested mixed Australian macro news. The Canadian dollar traded a shade firmer vs. the greenback below 1.3300, helped by higher oil prices. The USD/JPY pair retained its bullish momentum around the 112 handle, but the bulls lacked follow-through amid a softer buck. Meanwhile, the common-currency traded on the back foot near 1.1360 levels, unfazed by the recovery in gold prices as the focus shifted to into the key ECB monetary policy decision due later in the week ahead.

Main Topics in Asia

Trump says strong dollar hurting US competitiveness – Reuters

WSJ report: U.S. / China "agreement is taking shape"

Irish PM says Brexit delay is very likely – The Independent

Australia: Disappointing Q4 profits, inventories and wages data – ANZ

BOJ's Kuroda: Will debate policy normalization at an appropriate time - Reuters

PBOC Adviser: China growth to be >6% through 2020 – MNI

New Zealand's Treasury: Consumption growth supports forecast of 0.6% growth in Q4

UK’s Fox: EU offering long Brexit delay "not possible"

Oil bid in Asia on US-China trade optimism

China: Substantial progress made in trade talks with the US - Bloomberg

China’s ForeignMin: Moving towards better IP protection in China

China’s Zhang: US focus on security issues of Chinese goods 'unfair'

Shanghai Composite hits 8.5-month high, 50- & 100-day MA bull cross confirmed

Key Focus Ahead

Markets brace for a slew of second-tier macro releases from the EUR calendar today, as the Brexit-related headlines and US-China trade developments will continue to drive the overall risk trends. At 0930 GMT, the UK construction sector activity report for the month of February will be reported that is expected to arrive at 50.2 vs. 50.6 previous. Parallely, the Eurozone Sentix investor confidence numbers will be released, followed by the bloc’s factory gate price measure at 1000 GMT.

The NA session also lacks first-liner economic news and hence, the focus will be on the US construction spending data (due at 1500 GMT) and sentiment on the Wall Street for fresh dollar trades.

EUR/USD remains in the red despite trade optimism and Trump's bearish comments on USD

The EUR hasn't picked up a bid and could be offered in Europe despite potential risk-on in equities as any normalization of ties between the US and China will likely pave way for more Fed rate hikes. 

GBP/USD: Optimism surrounding delayed Brexit and US dollar weakness highlights 1.3270

The developments concerning the Brexit issue will be on the top watch-list for the Cable traders. However, February month British construction PMI could also offer intermediate moves. The UK construction PMI is likely to slip towards 50.2 from 50.6 registered in January.

Gold Price Forecast: Below $1,300 as expected, what's next?

Technical charts are also pointing to deeper losses, albeit after a minor bounce. That said, the yellow metal could pick up a strong bid, irrespective of dollar strength if Indo-Pak tensions escalate to full-blown war.

GBP/USD Weekly Forecast: Sterling set to correct lower as Brexit delay euphoria recedes

In the UK, the set of construction and services PMIs are scheduled for the next week together with the Bank of England Governor Mark Carney’ s testimony in the House of Lords. 

Week Ahead – March Geopolitics Madness begins with China

The focus this week will however be heavily on China, the US nonfarm payroll number and a few key rate decisions from the Reserve Bank of Australia (RBA), ECB and Bank of Canada (BOC).

GMT
Event
Vol.
Actual
Consensus
Previous
Monday, Mar 04
n/a
 
 
-6.7%
09:30
 
50.2
50.6
09:30
 
-3.1
-3.7
10:00
 
0.4%
-0.8%
10:00
 
 
3%
14:45
 
 
63.4
15:00
 
0.2%
0.8%
16:30
 
 
2.455%
16:30
 
 
2.405%
21:30
 
 
44.3
Tuesday, Mar 05
00:00
 
 
2.1%
00:01
 
 
1.8%
00:30
 
52.1
51.6
00:30
 
-9.2B
-10.7B
01:45
 
53.8
53.6
03:30
 
 
03:30
 
1.5%
1.5%
07:30
 
 
0.6%
07:30
 
 
-0.3%
08:55
 
55.1
55.1
08:55
 
52.7
52.7
09:00
 
51.4
51.4
09:00
 
52.3
52.3
09:30
 
 
09:30
 
50.2
50.1

Author

Dhwani Mehta

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.

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