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Forex Today: Risk reset amid China optimism, SGD slumps on easing talks, RBA Lowe caps Aussie’s recovery

Dhwani Mehta FXStreet

Despite China coronavirus death toll reaching 500, the Asian equities saw a solid risk-on rally this Wednesday amid expectations that China’s stimulus measures would likely lessen the negative economic impact of the outbreak on both the Chinese and the global economy.

Therefore, risk reset for the key theme in the Asian session, although markets remained wary over the rapidly spreading virus internationally. Around 4000 passengers were quarantined on a coronavirus-hit cruise ship anchored off Japan.

On currency markets, the Singapore dollar (SGD) plunged nearly 1% against its US counterpart after the country’s central bank that the currency had room to ease within its current settings amid weakening economic conditions due to the outbreak of the coronavirus in China. USD/SGD clocked a new four-month high near 1.3825.

Meanwhile, most Asian currencies witnessed good two-way action, with USD/JPY having bounced-off a dip to 109.37 before consolidating near 109.50, as the rebound was capped by losses in the S&P 500 futures and US Treasury yields. The Aussie failed to sustain the initial spike to 0.6746 but held steady above 0.6700, as markets assessed the latest comments from the Reserve Bank of Australia (RBA) Governor Lowe and disappointing Chinese Caixin Services PMI. The Kiwi also remained pressure despite upbeat New Zealand’s jobs data and firmer oil prices. Gold prices jumped towards $1565, benefiting from looming virus worries.

Amongst the European currencies, the EUR/USD pair traded on the back foot and eyed the 1.1000 level amid a broadly firmer US dollar while the cable stalled its recovery momentum below 1.3050.

Main Topics in Asia

A mixed New Zealand jobs report sends NZD to 0.65 the figure

Initial Iowa Caucus results show Biden in fourth place with 62% of precincts reporting – CNN

Coronavirus update: Hubei reports 65 new deaths, Ecuador announces its first case

RBA Lowe says economy still passing through “gentle turning point” for the better

RBA’s Lowe: Doing what we can on unemployment, up to government on fiscal policy

BOJ’s Wakatabe: Downside risks exist over BOJ's economic, price forecasts

China services PMI from Caixin/Markit: 51.8 (vs 52.5 Dec)

Singapore’s MAS: Sufficient room to easing of SGD due to virus, USD/SGD hits a four-month high

Govt Source: India's Jan gold imports plunge 48% to four-month low on record prices – Reuters

US Pres. Trump: The State of our Union is stronger than ever before!

Sources: Trump administration to meet on Huawei export curbs after Pentagon pushback – Reuters

USD/IDR: Rupiah remains pressured as Indonesia’s Q4 GDP disappoints with 4.97%

Key Focus Ahead

We have a busy EUR macro calendar this Wednesday, dominated by the Services PMI reports from across the Euro area and the UK that will start dropping in from 0815 GMT. Ahead of these readings, the Swiss government Consumer Climate report and the European Central Bank (ECB) Vice President De Guindos speech will be eyed at 0645 GMT and 0810 GMT respectively.

Later in the session, the Eurozone Retail Sales will be reported at 1000 GMT, followed by ECB’s Chief Economist Lane’s speech due at 1130 GMT. Ahead of the US open, the ECB President Lagarde’s speech will hog the limelight. Lagarde is due to speak at 1215 GMT in Paris.

Meanwhile, from the NA docket, the US ISM Non-Manufacturing Index and its sub-indices will be closely watched at 1500 GMT. Markets will also take cues from the US and Canadian Trade Balance report as well as from the Energy Information Administration (EIA) weekly US Crude Stocks Change data.

Besides the data, the China coronavirus risks and Hard Brexit fears will continue to play out in the day ahead.

EUR/USD feels the pull of gravity amid risk reset, ahead of Eurozone PMIs

EUR/USD is losing altitude amid risk reset in the financial markets. Coronavirus scare has eased with China's decision to inject liquidity. All eyes remain on Eurozone data, ECB Lagarde’s speech and US PMIs.

GBP/USD fails to hold onto recovery gains ahead of UK Services PMI

GBP/USD pulls back towards 1.3000 ahead of the London open on Wednesday. The Cable fails to extend Tuesday’s recovery amid fresh accusations on the UK PM Johnson’s crackdown on jurisdiction. Focus remains on UK Services PMI.

US ISM Non-Manufacturing PMI January Preview: Manufacturing to the fore

The US PMI for services forecast to be unchanged in January. Manufacturing PMI rebounded unexpectedly last month. US-China trade agreement bolsters the factor sector.

Coronavirus: Top five safe-haven assets to buy in times of trouble in 2020

The coronavirus outbreak has triggered the demand for safe-haven assets. A similar pattern has been seen with the Iran crisis and may reoccur throughout 2020.

GMT	Event	Actual	Consensus	Previous
Wednesday, Feb 05
00:01	EUR Consumer Confidence	85.5		81.4
00:30	HKD Nikkei Manufacturing PMI	46.8	45.2	42.1
00:30	JPY Jibun Bank Services PMI	51.0	52.1	49.4
01:01	EUR Purchasing Manager Index Services	56.9		55.9
01:30	JPY BoJ's Wakatabe speech
01:30	AUD RBA's Governor Lowe speech
01:45	CNY Caixin Services PMI	51.8	52.6	52.5
02:00	USD President Trump State of the Union address
04:00	IDR Gross Domestic Product (YoY)	4.97%	5.04%	5.02%
04:00	IDR Gross Domestic Product (QoQ)	-1.74%	-1.67%	3.06%
24h	MXN Constitution Day
06:00	RUB Purchasing Manager Index Services			53.1
06:45	CHF SECO Consumer Climate (3m)			-10.4
07:05	THB BoT Interest Rate Decision		1.25%	1.25%
08:00	HUF Retail Sales (YoY)			7.3%
08:00	CZK Retail Sales (YoY)		5.3%	2.9%
08:10	EUR ECB's De Guindos speech
08:15	EUR Markit Services PMI		53.9	54.9
08:30	SEK Industrial Production (MoM)			1.9%
08:30	SEK Industrial Production (YoY)			0.4%
08:30	SEK New Orders Manufacturing (YoY)			-1.2%
08:45	EUR Markit Services PMI		50.2	51.1
08:50	EUR Markit PMI Composite		51.5	51.5
08:50	EUR Markit Services PMI		51.7	51.7
08:55	EUR Markit Services PMI		54.2	54.2
08:55	EUR Markit PMI Composite		51.1	51.1
08:55	ISK CBI Interest Rate Decision			3%
09:00	EUR Markit Services PMI		52.2	52.2
09:00	EUR Markit PMI Composite		50.9	50.9
09:30	GBP Markit Services PMI		52.9	52.9
10:00	EUR Retail Sales (MoM)		-0.9%	1.0%
10:00	EUR Retail Sales (YoY)		2.4%	2.2%
11:00	EUR Unemployment Rate			6.1%
11:30	EUR ECB's Lane speech
12:00	USD MBA Mortgage Applications			7.2%
24h	NZD Waitangi Day
12:15	EUR ECB's President Lagarde speech
13:00	PLN NBP Base rate		1.5%	1.5%
13:15	USD ADP Employment Change		156K	202K
13:30	USD Trade Balance		$-48.2B	$-43.1B
13:30	CAD International Merchandise Trade		$-0.61B	$-1.09B
13:30	CAD Exports		$50.1B	$48.7B
13:30	CAD Imports		$50.30B	$49.78B
14:45	USD Markit Services PMI		53.2	53.2
14:45	USD Markit PMI Composite		53.1	53.1
15:00	USD ISM Non-Manufacturing Employment Index		55.2	55.2
15:00	USD ISM Non-Manufacturing Prices Paid		58.5	58.5
15:00	USD ISM Non-Manufacturing PMI		55	55
15:00	USD ISM Non-Manufacturing New Orders Index		58.0	54.9
15:30	USD EIA Crude Oil Stocks Change		3.000M	3.548M
17:15	CAD BoC's Wilkins speech
19:00	ARS Industrial Output n.s.a (YoY)			-4.5%
20:00	BRL Interest Rate Decision		4.25%	4.50%
21:00	KRW FX Reserves			408.82B
21:10	USD Fed's Brainard speech
23:00	KRW Current Account Balance		8.28B	5.97B
23:50	JPY Foreign Investment in Japan Stocks			¥-284.3B
23:50	JPY Foreign Bond Investment			¥-551.9B
Thursday, Feb 06
00:00	COP Consumer Price Index (YoY)		3.78%	3.80%
00:00	COP Consumer Price Index (MoM)		0.57%	0.26%
00:30	AUD National Australia Bank's Business Confidence (QoQ)		3	-2
00:30	AUD Retail Sales s.a. (MoM)		-0.2%	0.9%
00:30	AUD Trade Balance		5,950M	5,800M
00:30	AUD Imports			-3%
00:30	AUD Exports			2%
01:30	JPY BoJ's Masai speech
06:15	INR Reverse Repo Rate		4.9%	4.9%
06:15	INR RBI Interest Rate Decision (Repo Rate)		5.15%	5.15%
07:00	EUR Factory Orders n.s.a. (YoY)		-6.0%	-6.5%
07:00	EUR Factory Orders s.a. (MoM)		0.6%	-1.3%
07:45	EUR Individual Investment (Current Year)			-1%
08:00	PHP BSP Interest rate decision		3.75	4.00
08:00	HUF Industrial Output (YoY)			3.6%
08:00	CZK Industrial Production (YoY)		-1.4%	-3.2%
08:00	CZK Construction output (YoY)			4.5%
08:00	CZK Foreign Trade Balance (MoM)		-4.0B	10.2B
08:00	EUR ECB's President Lagarde speech
08:15	EUR ECB's De Guindos speech
09:00	EUR Unemployment Rate (MoM)			16.6%
09:00	EUR Economic Bulletin
09:30	ZAR Business Confidence Index			93.1
n/a	EUR 10-y Obligaciones Auction			0.438%
n/a	EUR 3-y Bond Auction			-0.236%
n/a	EUR 5-y Bond Auction			-0.103%
n/a	EUR 10-y Bond Auction			0.04%
10:00	EUR European Commission releases Economic Growth Forecasts
12:00	CZK CNB Interest Rate Decision		2%	2%
12:30	USD Challenger Job Cuts			32.843K
13:00	RUB Consumer Price Index (MoM)		0.5%	0.4%
13:00	RUB Central Bank Reserves $			$559.8B
13:30	USD Continuing Jobless Claims		1.720M	1.703M
13:30	USD Initial Jobless Claims		215K	216K
13:30	USD Initial Jobless Claims 4-week average			214.5K
13:30	USD Unit Labor Costs		1.3%	2.5%
13:30	USD Nonfarm Productivity			-0.2%
14:15	USD Fed's Kaplan speech
15:30	USD EIA Natural Gas Storage Change			-201B
16:30	USD 4-Week Bill Auction			1.545%
21:30	AUD AiG Performance of Construction Index			38.9
21:30	AUD AiG Performance of Services Index			48.7
22:30	AUD RBA's Governor Lowe speech
23:30	JPY Labor Cash Earnings (YoY)			-0.2%
23:30	JPY Overall Household Spending (YoY)		-1.7%	-2.0%
n/a	JPY JP Foreign Reserves			$1,323.8B
Friday, Feb 07
00:01	GBP Rightmove House Price Index (MoM)			2.3%
00:01	GBP Rightmove House Price Index (YoY)			2.7%
00:15	USD Fed's Quarles speech
00:30	AUD RBA Monetary Policy Statement
05:00	JPY Leading Economic Index		90.8	90.8
05:00	JPY Coincident Index		95.9	94.7
05:30	EUR Manufacturing Output (MoM)			-1.1%
06:00	ZAR Net $Gold & Forex Reserve		$45.132B	$44.897B
06:00	ZAR Gross $Gold & Forex Reserve		$55.127B	$55.058B
07:00	CNY Exports (YoY) CNY		-6.3%	9.0%
07:00	CNY Imports (YoY) CNY		19.1%	17.7%
07:00	CNY Trade Balance USD		$38.64B	$47.21B Revised from $46.79B
07:00	CNY Imports (YoY)		-6.0%	16.5% Revised from 16.3%
07:00	CNY Trade Balance CNY		261.58B	329.27B
07:00	CNY Exports (YoY)		-4.8%	7.9% Revised from 7.6%
07:00	EUR Industrial Production n.s.a. w.d.a. (YoY)		-4.0%	-2.6%
07:00	EUR Industrial Production s.a. (MoM)		-0.2%	1.1%
07:00	EUR Current Account n.s.a.		€22.0B	€24.9B
07:00	EUR Imports (MoM)		0.2%	-0.5%
07:00	EUR Trade Balance s.a.		€18.4B	€18.3B
07:00	EUR Exports (MoM)		0.5%	-2.3%
07:00	DKK Industrial Production (MoM)			-5.2%
07:00	NOK Gross Domestic Product Growth			0%
07:00	NOK Gross Domestic Product Growth Mainland		0.3%	0.7%
07:00	NOK Manufacturing Output		0.3%	-0.4%
07:45	EUR Exports, EUR			€42.05B
07:45	EUR Imports, EUR			€47.63B
07:45	EUR Trade Balance EUR		€-5.00B	€-5.58B
07:45	EUR Industrial Output (MoM)		-0.3%	0.3%
07:45	EUR Current Account			€0.5B
07:45	EUR Nonfarm Payrolls (QoQ)		0.2%	0.2%
08:00	CNY Foreign Exchange Reserves (MoM)		$3.100T	$3.108T
08:00	EUR Industrial Output Cal Adjusted (YoY)		2.2%	2.1%
08:00	EUR Wholesale Prices n.s.a (YoY)			-0.4%
08:00	EUR Wholesale Prices n.s.a (MoM)			0.1%
08:00	EUR Trade Balance			€301.2M
08:00	HUF Trade Balance			€484M
08:00	EUR Foreign Trade Balance			€157.6M
08:00	CHF Foreign Currency Reserves			771B
08:30	GBP Halifax House Prices (YoY/3m))		3%	4%
08:30	GBP Halifax House Prices (MoM)		0.0%	1.7%
09:00	EUR Retail Sales s.a. (MoM)		0.4%	-0.2%
09:00	EUR Retail Sales n.s.a (YoY)		1.2%	0.9%
09:00	SGD Foreign Reserves (MoM)			279.4B
09:00	CZK FX Reserves			€133.28B
10:00	CLP Core Consumer Price Index (Inflation) (MoM)			0.1%
10:00	HUF Budget Balance			-452.7B
10:30	RUB Interest rate decision		6.00%	6.25%
11:00	CLP Consumer Price Index (Inflation) (MoM)			0.1%
11:00	EUR Global Trade Balance			€-5.194B
11:30	INR FX Reserves, USD			$466.69B
12:00	BRL IPCA Inflation		1.08%	1.15%
12:00	CLP Trade Balance			$1,460M
12:00	MXN 12-Month Inflation		2.76%	2.83%
12:00	MXN Core Inflation		0.32%	0.41%
12:00	MXN Headline Inflation		0.50%	0.56%
12:00	MXN Consumer Confidence s.a			43.4
12:00	MXN Consumer Confidence			43.76
13:00	PLN Central Bank FX Reserves			€114.5B
13:00	RON Interest rate decision		2.5%	2.5%
13:30	USD Nonfarm Payrolls		160K	145K
13:30	USD Average Weekly Hours		34.3	34.3
13:30	USD Average Hourly Earnings (YoY)		3.0%	2.9%
13:30	USD Average Hourly Earnings (MoM)		0.3%	0.1%
13:30	USD Labor Force Participation Rate		63.1%	63.2%
13:30	USD U6 Underemployment Rate		6.7%	6.7%
13:30	USD Unemployment Rate		3.5%	3.5%
13:30	CAD Average Hourly Wages (YoY)			3.84%
13:30	CAD Net Change in Employment		15.0K	27.3K Revised from 35.2K
13:30	CAD Participation Rate		65.6%	65.5%
13:30	CAD Unemployment Rate		5.8%	5.6%
14:30	TRY Treasury Cash Balance			-36.77B
15:00	USD Wholesale Inventories		-0.1%	-0.1%
15:00	CAD Ivey Purchasing Managers Index			43.6
15:00	CAD Ivey Purchasing Managers Index s.a		53.3	51.9
18:00	USD Baker Hughes US Oil Rig Count			675
20:00	USD Consumer Credit Change		$15.00B	$12.51B
20:30	USD CFTC Gold NC Net Positions			$330.1K
20:30	USD CFTC Oil NC Net Positions			461.8K
20:30	USD CFTC USD NC Net Positions			$16.8K
20:30	GBP CFTC GBP NC Net Positions			£17.7K
20:30	JPY CFTC JPY NC Net Positions			¥-36K
20:30	EUR CFTC EUR NC Net Positions			€-58.9K
20:30	AUD CFTC AUD NC Net Positions			$-27.5K

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.

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