Amid holiday-thinned markets, the risk was broadly sold-off amid a resurgence of the US-China trade tensions. The spat between the two countries over China’s coronavirus handling intensified after US President Donald Trump threatened retaliatory tariffs on Beijing.
The Asian stocks tracked the overnight drop on Wall Street while US equity futures fell nearly 1.5%. Amid risk-aversion, the US dollar was offered fresh signs of life vs. its main peers after Thursday’s steep decline. WTI consolidated the latest recovery below $20. Gold prices were muted below $1700.
Across the fx space, USD/JPY consolidated an uptick to 107.40 levels amid poor Japanese data and haven demand for the greenback. AUD/USD was the weakest and dropped to test the 0.6450 level amid trade woes. The kiwi was not left behind and slipped back below 0.6100, down over 0.50% so far. USD/CAD regained 1.4000 as the Canadian dollar lost ground in sync with its commodity peers.
Among the European currencies, EUR/USD posted small losses below 1.0950 while the cable turned back in the red below 1.2600 ahead of the UK economic releases.
Main topics in Asia
US Pres Trump says he could use tariffs to respond to China
Federal Reserve expands access to its PPPLF to additional lenders
Japan CPI: (YoY) Apr: 0.2% (est 0.1%, prev 0.4%)
RBNZ plans to keep the amount of bond-buying unchanged next week
Saudi Arabia's oil output surged to record high in April
USD/KRW Price Analysis: South Korean won corrects further from 7-week tops on exports slump
WH Adviser Kudlow: US not considering cancelling debt held by China
US Pres. Trump exploring blocking a govt fund from investing in Chinese equities – Bloomberg
Key focus ahead
The European calendar is scarce showing, as most major European markets are closed and hence, the focus will be on the UK docket, with the UK Final Manufacturing PMI in focus among other minority reports. Brexit-related headlines will also draw some attention.
Markets will continue to watch out for the easing plans for the lockdowns globally while oil and US dollar price-action will be closely followed.
Across the pond, the Manufacturing PMI reports from both Canada and the US will headline. The US ISM will be of note, dropping in at 1400 GMT. Baker Hughes US Oil Rigs Count data will wrap a light calendar this Friday.
EUR/USD on track to end two-week losing run
While EUR/USD has pulled back from two-week highs registered on Thursday, the currency pair still looks set to end its two-week losing trend. With European data docket empty, the pair is at the mercy of the stock markets and the US data.
GBP/USD snaps two-day run-up, slips below 1.2600, ahead of UK PMI
GBP/USD slips from 13-day high amid broad US dollar pullback amid US-China trade woes. UK PM Johnson to give guidelines on easing lockdown restrictions next week. Focus on UK PMIs amid holiday-thinned trading.
US ISM Manufacturing PMI April Preview: Free fall, is there a parachute?
Overall manufacturing PMI expected to drop to lowest level since the financial crisis. Employment and new orders indexes to fall deep into contraction. Factory sector remains a key economic indicator.
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