Cautious trading sentiment highlighted the Asian session at the start of a fresh week this Monday, as the Hong Kong violence added the looming US-China trade deal anxiety and triggered a flight to safety across the board. Therefore, the safe-havens such as the Yen, gold and Swiss franc traded on the front foot while the risk assets in oil, Aussie and Asian equities suffered. The Asian stocks were mainly dragged lower by a 2% drop in Hong Kong’s Hang Seng index. Despite the risk-off action, the US Treasury yields managed to recover some ground after last week’s slump.
Across the G10 currencies, the Kiwi emerged as the strongest, ditching the price action in its OZ counterpart, the Aussie. The NZD/USD pair tested 0.6350, up 0.30% while the Aussie kept range near weekly lows of 0.6847. Meanwhile, USD/JPY retraced from five-month tops and retests 109.00 amid risk-aversion.
Heading into the European morning, both the European currencies, the EUR/USD pair remains close to three-week lows of 1.1017 while the Cable consolidates the early gains below 1.2800, hurt by Moody’s outlook downgrade.
Main Topics in Asia
Key Focus Ahead
Monday’s EUR calendar offers a flurry of economic releases from the UK docket, all dropping in at once at 0930 GMT, including the monthly and quarterly GDP figures, Industrial Production, Trade Balance and Business Investment. Meanwhile, there is nothing of relevance from the Eurozone.
With the US and Canadian markets closed today, the focus will remain on the US-China trade related developments amid a speech by the Fed official Rosengren, scheduled at 1315 GMT.
Sellers catch their breather after the five-day losing streak, allowing a brief phase of consolidation in EUR/USD above the 1.1000, having tested the three-week lows of 1.1017 reached last Friday. All eyes remain on trade, US inflation and Eurozone GDP numbers.
GBP/USD seesaws near three-week low after Moody’s cut UK outlook to negative. The broad USD strength and market’s cautious mood ahead of the key British data limit pair’s moves. The UK data dump in the spotlight amid the US holiday.
The UK economy has likely rebounded in the second quarter after contracting beforehand. The data comes after downbeat forecasts from the central bank and ahead of the elections. GBP/USD has room to recover if economists' expectations are realized.
Contradicting trade headlines whipsawed markets and will continue doing so. Can US data remain upbeat? Inflation, retail sales, and, most importantly, Powell’s testimony are all eyed. Here the highlights for the upcoming week.
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