A lack of certainty on the long-awaited US-China preliminary trade deal, amid signs of a delay in sealing the deal, dampened the investor sentiment across Asia this Thursday. The US dollar regained the bids across the board amid a resurgence of flight to safety while the commodities wilted on trade doubts-led risk-aversion. The ultimate safe-haven gold treaded water above 1490 levels, with the immediate upside by 50-DMA.
Amongst the G10 currencies, the Japanese yen topped while the Kiwi emerged as the main laggard in the Asian trades. USD/JPY took a U-turn from 109.00 and fell sharply to near 108.65 levels, as risk-off crept back while the Aussie ignored a big beat on the Australian Trade Surplus and hit six-day lows of 0.6862. The Kiwi shed -0.30% to trade below the 0.6350 barrier. Meanwhile, the Canadian dollar was the strongest amongst the commodity-currencies, as stabilizing oil prices lent some support, with USD/CAD up 0.10% just under the 1.32 handle.
Heading into the European opening bells, both the European currencies, the EUR/USD and Cable are on the back foot, with the Fiber holding above 1.1050 while the latter reached weekly lows sub-1.2850 amid renewed UK political jitters and ahead of the key Bank of England’s (BOE) “Super Thursday”.
Main Topics in Asia
US-China trade updates
Chinese trade source: December 15 tariffs will not be imposed by the US – Fox Business
US Official: US-China trade deal signing - London a possible venue
US Pres. Trump to deliver a speech on "trade and economic policy" next Tuesday - CNBC
US collected a record $7bn in tariffs in September - WSJ
Other key headlines
Japan’s Manufacturers Index seen at -9 in Nov vs. -5 previous – Reuters Tankan
Tom Watson announces a shock resignation as MP and Labour Deputy Leader – The Telegraph
Australia's Trade Surplus expands to AUD 7180m in Sept, a positive surprise
Market pricing 68% chance of an RBI rate cut on Dec 5
Trade war results in higher prices for consumers, substantial export losses - UNCTAD study
Key Focus Ahead
In absence of first-tier macroeconomic releases from the EUR calendar this Thursday, the BOE monetary policy decision accompanied by its minutes and Quarterly Inflation Report (QIR) will hog the limelight at 1200 GMT ahead of the BOE Governor Carney’s presser scheduled at 1230 GMT. The UK central bank is unanimously expected to remain on-hold in its pre-election meeting. However, markets expected the central bank to lower its growth and inflation forecasts amid uncertainty over the Brexit outcome.
The NA session also remains data-light, with the only US Jobless Claims release (at 1330 GMT) of note among other minority reports. Also, the speech by the Fed official Kaplan, scheduled at 1805 GMT, will be closely eyed for fresh dollar trades. Although the USD price-action and the risk trends will continue to be driven by the US-China trade developments.
EUR/USD logs longest daily losing streak in two months
EUR/USD has charted the longest daily losing streak in two months ahead of the data in Germany, which is expected to show the factory activity contracted in September. Weak data will likely invite stronger selling pressure, as suggested by technical charts.
GBP/USD slips to weekly low ahead of BOE “Super Thursday”
GBP/USD bears the burden of broad USD strength amid the UK’s general election campaign. Tories keep the first place and cheer Tom Watson’s exit. Meanwhile, BOE is expected to leave current monetary policy unchanged in its pre-election meeting.
BOE Preview: Three reasons why Carney's last Super Thursday may send GBP/USD down
The Bank of England may drop its hawkish bias despite the Brexit calm. The bank's fresh inflation forecasts and the Governor's sentiment will determine market movement. GBP/USD has more room to the downside than to the upside.
US China trade and the global economy: Q&A with FXStreet senior analyst Joseph Trevisani
The US and China seem to be getting closer to a partial trade deal and a removal of previous tariffs is in the cards. And now, reports suggest that past duties may be removed.
All in all, a positive development, isn't it?
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