|

Forex Today: Safe-havens bid in Asia on N. Korea news, Eurozone CPI, Draghi’s speech eyed

Forex today saw risk-off flows seeping into Asia this Wednesday, as rising Treasury yields re-fuelled investors’ concerns over higher borrowing costs while dwindling peace talks between North and South Korea also dampened the market sentiment, boosting the demand for the safe-havens at the expense of the risk/ higher-yielding assets.

The Yen, therefore, attempted a minor bounce versus its American rival, despite a weaker Japanese GDP print, and traded near 110.25 levels. The Aussie traded on the back foot amid risk-aversion and softer Australian wages data. However, the Kiwi ditched its OZ counterpart and advanced towards the 0.69 handle, having found some support from a retreat in the US Treasury yields from multi-year tops.

Among other related markets, the Asian equities traded mostly lower on rising geopolitical tensions and in the wake of the latest rally in Treasury yields. Both crude benchmarks dipped but remained near four-year highs while gold prices attempted a recovery towards $ 1295 mark.  

Main topics in Asia

BoE's Broadbent warns of "menopausal" phase in UK's economy - The Telegraph

Ben Broadbent, the Deputy Governor of the Bank of England (BoE), made some statements regarding a potential slowdown in the UK’s economy, as noted by The Telegraph.

Japanese economy contracted for the first time in nine quarters

Japan's first-quarter gross domestic product (GDP) contracted at an annualized rate of 0.6 percent as private consumption and capital expenditure (capex) slowed, the official data released earlier today showed. 

US 10-year yield rises to 7-year high, what's next?

The yield on the benchmark 10-year treasury note finally cut through the resistance at 3.04 percent and rose to 3.095 percent yesterday - the highest level since 2011 and the technical charts indicate the party has just begun.

North Korea suspends talks with South Korea - Reuters

Reuters reports that North Korea on Wednesday cast doubts on the summit between its leader Kim Jong Un and US President Donald Trump scheduled for next month while suspending military exercises between South Korea and the United States.

N. Korea will never engage in economic trade with US in exchange for denuclearization - KCNA

North Korea’s official Korean Central News Agency (KCNA) came out with further headlines, citing that North Korea will never engage in economic trade with the US in exchange for giving up its nuclear programme.

S.Korea: North's decision to suspend inter-Korean talks 'regrettable' - Reuters

South Korea’s Unification Ministry came out with a statement, via Reuters, responding to the KCNA reports that North Korea suspended talks with the South.

Key Focus ahead

After an eventful Asian session, the European session appears relatively quiet, with the only first-tier Eurozone final CPI data due to be released among other minority reports. Later, during mid-Europe, the ECB President Draghi will be seen on the wires, delivering opening remarks at an ECB event held in honor of the out-going ECB Vice President Vitor Constancio, in Frankfurt.

The NA session is a lot busier, with the Canadian manufacturing sales data due on the cards ahead of a series of macro releases from the US docket that includes the housing and industrial production data. Also, the CAD traders will eye the speech by the BOC Governing Council member Schembri and EIA crude supplies data for near-term trading impetus. Meanwhile, the comments by the SNB Chairman Jordan will also remain in focus later on Wednesday.

Also, attention will remain on the US-China trade talks, as the Chinese delegates arrived in Washington earlier today to discuss the trade issues.

EUR/USD: Downside exposed as ECB balance sheet hit new record high

The common currency could continue losing altitude in the near future as the ECB and the Fed continue to move in opposite directions. The ECB balance sheet has expanded to a new lifetime high. On the other hand, the Fed is tapering its balance sheet.

GBP/USD hammered into 1.35 with a light schedule on tap for Wednesday

Today sees a notable lack of figures for the GBP, but the US session is a heavily-scheduled affair, starting off with US Building Permits (forecast 1.35 million, prev. 1.354 million) alongside a speech from the Fed's Bostic at 12:30 GMT ….

10-year Treasury yield can get to 3.5 percent with "no trouble at all" for stocks: JP Morgan

The 10-year treasury yield rose to 3.09 percent on Tuesday - the highest level since 2011 and looks set to rise further towards 3.5 percent, according to technical charts. 

China delegation for trade talks have arrived in the US - Xinhua

China’s state news agency, Xinhua, reports that the Chinese delegation have arrived in Washington for trade talks.

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.

More from Dhwani Mehta
Share:

Editor's Picks

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying
The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.
Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff
Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.