Forex Today: Trump signs Hong Kong bill on Thanksgiving; focus on German CPI

Dhwani Mehta FXStreet

The Chinese and Hong Kong authorities continued to warn the US of retaliation after US President Trump signed the Hong Kong human rights bill into law on Thanksgiving Thursday. The risk sentiment remained fragile on the US-China political tensions, but failed to budge the markets, as thin liquidity and minimal volatility are likely to extend, with the US markets closed on Thanksgiving Day.

Among the G10 currencies, the Aussie hit six-week lows near 0.6760 on the Hong Kong Democracy Act news and meandered near the last amid downbeat Australian Q3 Capex data. The Kiwi, however, cheered an improvement in the private ANZ Business Confidence data and jumped to 0.6435 levels. The USD/JPY pair retreated from half-yearly highs of 109.61 and hit daily lows of 109.33 before recovering to near 109.50 region. The mixed action in the Asian equities, a broadly subdued US dollar and losses in the S&P 500 futures collaborate to the caution trading seen in the Yen pair, making AUD/JPY the biggest loser in Asia. Meanwhile, gold prices received some fresh signs of life amid softer risk tones but remained below $ 1460 mark.

Both the European currencies, EUR/USD and GBP/USD benefited from the renewed US dollar weakness while the pound cheered the You Gov (MRP) poll that showed the UK PM Johnson remains on course to win the Dec 12 election with a majority.

Main Topics in Asia

YouGov Poll: MRP model projects a Tory majority of 68 – The Times

US President Trump tweets on the Wednesday's US stock market record highs

US Pres. Trump signs Hong Kong Bill that will strain relations with China - Bloomberg

New Zealand ANZ business survey for November improves dramatically, boosts NZD

Australia 3Q Private Capital Expenditure report: Fell by 0.6% in the September quarter 2019

Hong Kong government: Reiterates bills are unnecessary and unwarranted

China reiterates its retaliation threat after Trump signs the Hong Kong bill - China's Foreign Ministry

Hong Kong Democracy Act shows US’ sinister intention and hegemonic nature – Global Times

China’s Hong Kong affairs office: US is the biggest black hand behind unrest in Hong Kong

US House Speaker Pelosi: pleased that the President signed Hong Kong legislation – Fox News

US has no jurisdiction over Hong Kong – Global Times

ECB’s Villeroy: Level of ECB's key short-term rates and time horizon of policy measures matter

China’s ForeignMin: Lodged stern representations with the US over Hong Kong rights law

BOJ’s Kuroda: Mix of fiscal and monetary policy is standard way of dealing with economy

Key Focus Ahead

Markets gear up for a busy EUR economic calendar, as the Swiss GDP report at 0645 GMT and a slew of Eurozone economic sentiment and confidence indicators will be published at 1000 GMT. The main focus in Europe will be the German Preliminary Harmonized Index of Consumer Prices for November, dropping in at 1300 GMT.

Meanwhile, the NA session will be pretty quiet amid US Thanksgiving holiday-thinned trades. Therefore, markets will look forward to the Canadian Current Account data lined up for release at 13330 GMT, followed by the speeches from the ECB policymakers Coeure, Weidmann and Lane.

In the meantime, the primary market driver will continue to remain the US-China trade and political-related developments, with China expected to announce retaliation against the US’ interference in Hong Kong’s internal matter.

EUR/USD: Bulls need a big beat on German CPI

EUR/USD is operating on slippery grounds and will likely have a hard time defending key support, unless German inflation data, due at 13:00 GMT, blows past estimates, weakening dovish ECB expectations. German inflation is seen dropping 0.6% in November.

GBP/USD probes weekly high above 1.2900 on YouGov poll

In addition to the YouGov poll, political tension between the US and China over the Hong Kong Act, keep the GBP/USD pair buoyed around 1.2930 while heading into the London open on Thursday. The opposition Labour Party’s allegations on the Tories, over NHS, fail to disappoint cable buyers.

Trump signs HK Bill, what next for USDJPY & Gold

There is one thing in the markets that can skittle the trade deal – US President Trump signing off the HK Bill passed in the US senate last week. Guess what, he just announced that it is signed. Watch out for a liquidity crunch today for Gold & USD/JPY.

GMT	Event	Consensus	Previous
Thursday, Nov 28
24h	USD Thanksgiving Day
06:45	CHF Gross Domestic Product (YoY)	0.8%	0.2%
06:45	CHF Gross Domestic Product s.a. (QoQ)	0.2%	0.3%
09:00	EUR M3 Money Supply (YoY)	5.5%	5.5%
09:00	EUR M3 Money Supply (3m)	5.7%	5.5%
09:00	EUR Private Loans (YoY)	3.5%	3.4%
10:00	EUR Services Sentiment	8.8	9.0
10:00	EUR Consumer Confidence	-7.2	-7.2
10:00	EUR Industrial Confidence	-9.1	-9.5
10:00	EUR Economic Sentiment Indicator	101.0	100.8
10:00	EUR Business Climate	-0.14	-0.19
13:00	EUR Consumer Price Index (YoY)	1.3%	1.1%
13:00	EUR Consumer Price Index (MoM)	-0.6%	0.1%
13:00	EUR Harmonized Index of Consumer Prices (YoY)	1.2%	0.9%
13:00	EUR Harmonized Index of Consumer Prices (MoM)	-0.7%	0.1%
13:30	CAD Current Account	-9.00B	-6.38B
16:35	EUR ECB's Cœuré speech
19:35	EUR German Buba President Weidmann speech
20:00	EUR ECB's Lane speech
21:45	NZD Building Permits s.a. (MoM)	-2.5%	7.2%
22:00	NZD ANZ - Roy Morgan Consumer Confidence		118
23:30	JPY Tokyo Consumer Price Index (YoY)	0.4%	0.4%
23:30	JPY Tokyo CPI ex Food, Energy (YoY)	0.6%	0.7%
23:30	JPY Tokyo CPI ex Fresh Food (YoY)	0.6%	0.5%
23:30	JPY Jobs / Applicants Ratio	1.56	1.57
23:30	JPY Unemployment Rate	2.4%	2.4%

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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