Broad-based US dollar comeback was the main underlying theme in Asia this Wednesday, as traders looked past the US President Trump’s impeachment talks and cheered fresh US-China trade optimism. The Treasury yields recovered in tandem with the US equity futures but the Asian stocks slipped, having tracked the declines on the Wall Street overnight. Gold stalled its recent upside momentum and consolidated below $ 1535 levels.
Amongst the G10 currencies, the Kiwi witnessed good two-way trades after RBNZ’s status-quo powered the bulls to 0.6350 before reversing to near 0.6320 region. Likewise, the AUD/USD pair also faded its brief recovery above the 0.68 handle. The Yen emerged the weakest across the board, as USD/JPY extended the bounce to near 107.40 region on trade optimism. The Swiss Franc and Canadian dollar also lost ground vs. the buck, as the Loonie was also weighed by weaker oil prices.
Meanwhile, the EUR/USD pair slipped below the 1.1000 level heading into a quiet EUR calendar while Cable faded Tuesday’s rally and now targets 1.2450 ahead of the House of Commons session.
Main Topics in Asia
US-China trade updates
Chinese diplomat Wang Yi: US should not try and change China
China to buy more US farm products in latest goodwill gesture
Sources: China said to have made enquiries about purchasing US pork
Other key headlines
US House Speaker Pelosi: House to open a formal Trump impeachment enquiry
Iranian President Rouhani: US President Trump removed trust by leaving pact
NZ Trade Balance: NZD -1565m (vs expected -1400m)
Bank Of Japan Minutes (Jul 29-30)
Macron: Believe the conditions are in place for a rapid return to negotiations between Iran and US
China's Beigi Book: Manufacturing the prime cause of economic weakness in 3Q
Goldman Sachs: US safest place for capital - Bloomberg
Saudi Aramco to update information on expected timeline of repairs by Sept 30
RBNZ leaves rates unchanged at 1.00%, Kiwi jumps over 20 pips
Key Focus Ahead
There is nothing much of note in the European session ahead, in terms of the economic data, and therefore, the second-liner UK BBA Mortgage Approvals and CBI Distributive Realized Trades Survey will be eyed for fresh trading incentives ahead of the House of Commons session. The UK Parliament reconvenes on Wednesday after the UK Supreme Court found the UK PM Johnson guilty of suspending the Parliament unlawfully. Meanwhile, the speech by the European Central Bank (ECB) Governing Council member Coeure at 0700 GMT will remain in focus.
In the NA session, the Swiss National Bank (SNB) will publish its Quarterly Bulletin for Q3 ahead of the US New Homes Sales data due at 1400 GMT. The Energy Information Administration (EIA) weekly Crude Oil Stocks data will be eagerly awaited for fresh oil trades.
Further, the geopolitical and trade developments could continue to emerge the main market motor.
EUR/USD retraces to 50-hour MA support, focus on ECB speak
EUR/USD has fallen back to the 50-hour moving average (MA) support ahead of Europe open and could suffer deeper losses on dovish ECB speak. A strong bounce could be seen if ECB's Coeure confirms his opposition to the ECB's latest QE program.
GBP/USD fails to hold on to recovery gains ahead of the House of Commons session
With the fading optimism after the British Supreme Court judgment combined with overall strength of the greenback, GBP/USD drops towards 1.2450 while heading into the London open on Wednesday.
Gold technical analysis: Bulls look to 1,590 as the 127.2% Fibo target
Gold bulls have the 1,550 level in sight, which guards territories towards 1,590 as the 127.2% Fibo target. The price has been building a positive trend above the 21-day moving average.
US Second Quarter Final GDP Revision Preview: The consumer is cued
Annualized GDP is the second quarter predicted to be unchanged at 2.0%. Consumer spending driving US growth. Business investment curtailed by trade concerns.
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