Forex Today: Risk rebounds on renewed US-China trade talks, UK retail sales in focus

The risk-on sentiment was the main theme in Asia this Thursday on a rebound in appetite for risk assets amid calming fears over Turkey, as Qatar pledged to aid Turkey. Also, renewed US-China trade talks provided additional lift to the market sentiment, weighing down on the US dollar across its main competitors.

Across the fx space, the higher-yielding Aussie benefited the most from risk-on and a drop in the Australian jobless rate while the Euro was the second-best performer, as the EUR bulls tracked the recovery in Lira. However, the USD/JPY pair traded little changed near 110.80 levels, despite risk-recovery, as BoJ’s rate hike talks keep the Yen somewhat buoyed.

Among other related markets, the Asian equities traded mostly lower, dragged down by losses in China stocks while the Japanese Nikkei 225 index was flat at 22,190 points. Oil prices attempted a minor bounce, with Brent nearing $ 71 level. Gold prices on Comex remained weaker below $ 1180 levels while copper prices turned positive to trade near $ 2.60 mark.

Main topics in Asia

Qatar to provide aide to Turkey - Reuters

Japan Trade Balance contracts to a deficit of ¥-231.2 billion

Trump: tariffs will rescue US steel industry - WSJ

Australia's Unemployment rate hits 5.3% while jobs miss expectations

China’s Vice Commerce Minister to visit US for trade talks

USD/TRY holds below 6.00 in Asia

IMF Spokesperson: Not received any indication Turkey will ask it for financial assistance

BoJ sets the stage for a rate hike before hitting its 2% inflation target – MNI

Asian stocks brace ahead of US-China trade talks    

Key Focus ahead

Today’s EUR calendar also offers a plenty of risk events for the EUR, GBP traders, starting off with the German WPI release at 0600 GMT, followed by the key UK retail sales that will show up at 0830 GMT. The UK retail sales are expected to ticker to 0.2% m/m and 3.0% y/y in the month of July while core retail sales are likely to come in at 0.1% m/m and 2.8% y/y.

At 0900 GMT, the Eurozone trade balance will be reported for June, which is seen a tad higher at EUR 17.0 billion. Later on, the US docket sees the housing starts and building permits data at 1230 GMT alongside the release of the usual weekly jobless claims and Philly Fed manufacturing survey.  From Canada, traders will eye the ADP employment change and manufacturing sales data, running parallel to the US releases.

EUR/USD: US/China trade talks a big positive, focus on today's close after doji

Riskier assets and the EUR scored gains in Asia, possibly due to the news that Chinese officials will be traveling to the United States for trade talks in late August.

GBP/USD trying to hang on to 1.27 ahead of UK retail sales

Sterling traders are hoping that the m/m Retail Sales figures for July manage to climb by just 0.2% compared to the previous month's -0.5% decline, while the y/y figure for July are expected to tick up from 2.9% to 3.0%.

UK: Evidence on retail sales in July has been mixed – Nomura

Analysts at Nomura offer a sneak peek into today’s UK retail sales report due to be released at 0830 GMT.

Strong Dollar: 3 things that could halt the Fed hikes and send the Dollar down

The Fed has accelerated the pace of its rate hikes. It hiked rates three times last year and is on course to four increases this one. The FOMC under Powell also increased the forecasts for 2019 and 2020.