A sense of calm prevailed in the market, with most majors extending their recovery mode amid fresh US dollar weakness across the board. The Asian traders continue to weigh in the dovish Fed Chair Powell’s testimony and shrugged off upbeat US inflation data. However, the Treasury yields attempted a tepid bounce across the curve, having kept Gold prices sidelined below the 1410 level.
Among the Asia-pac currencies, the USD/JPY pair enjoyed good two-way businesses so far this Friday. The spot extended the overnight recovery near 108.60 region before receding sharply to test the key support of 108.31. The Aussie extended the rebound and tested the 0.70 handle despite looming US-China trade uncertainty while the NZD/USD pair rallied hard in a bid to regain the 0.67 handle. The recent strength in oil prices also helped the commodity currency, the Kiwi, as the oil bulls were underpinned by the risks of Gulf of Mexico storm turning into a hurricane and escalating Middle East tensions.
Meanwhile, both the EUR/USD and Cable traded firmer amid a broadly weaker US dollar and ahead of the Eurozone Industrial Production data release.
Main Topics in Asia
Fed’s Kashkari: Sought half-point cut in June to re-anchor inflation
Fed Lael Brainard: Perspectives on the Economy from Scranton
US Pres. Trump’s pick for top military adviser: China poses top threat for decades ahead – SCMP
Sources: US will not blacklist Iran's foreign minister, for now – Reuters
China's Liu He: Pressures on economy 'normal' - Xinhua
St. Louis Fed Financial Stress Index drops for fourth consecutive week
US NHC: Tropical storm Barry could become hurricane on late Friday
Huawei Chairman again demands US remove it from the US entities list
Asian stocks traded mixed ahead of China trade data
Gold pulls back amid trade jitters, lack of fresh catalysts
India: US to seek rollback of Indian tariffs on some agricultural products – Reuters
WTI: Bulls hold reins near 7-week top amid commodity rally
Key Focus Ahead
Markets gear up for a busy EUR docket to wrap an eventful week, with the German Wholesale Price Index (WPI) data dropping in at 0600 GMT, following the Chinese trade balance at 0700 GMT. At 0900 GMT, the Eurozone Industrial Production data will be reported that is likely to have a significant impact on the shared currency, as the European Central Bank (ECB) looks to ease monetary policy sooner (than later). The UK docket remains data empty and therefore, the UK political dram will continue to influence the GBP price-action.
The NA session offers the only relevant data in the US Producer Price Index (PPI) data, due at 1230 GMT. The speech by the Fed official Evans will also grab some attention ahead of the US Baker Hughes Oil Rig Count data due on the cards at 1700 GMT.
EUR/USD probing key trendline hurdle, focus on Eurozone industrial production
EUR/USD is chipping away at key trendline hurdle. Breakout may remain elusive if Eurozone data disappoints expectations. China trade data is expected to show a surge in exports in CNY terms.
GBP/USD: Well bid near 1.2450 despite UK’s political stalemate
The Cable traded with moderate gains, showing little reaction to the UK political and Brexit uncertainty, as markets focused on the USD weakness amid dovish signals from the Fed policymakers.
The Phillips Curve and the Fed’s wage insurance policy
Rates have once again turned. The 10-year has gained 18 point to a 2.13% close on July 11th. The 2-year has added 13 points to 1.86% also on the 11th. It traded as high as 1.92% on the 9th.
Brent technical analysis: Eyes break above $67 with falling channel breakout
Brent oil could soon challenge immediate resistance at $67.14, as the 15-minute chart is reporting an expanding descending channel breakout.
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