Forex Today: USD retreats on US politics, UK jobs – Up next

Forex today witnessed the extension of the corrective move in the US dollar from three-week tops reached against its main competitors in the US last session, following upbeat US PPI data release. The renewed sell-off in the greenback was mainly driven by the reports that a Republican candidate lost the Alabama US Senate race, which could make it difficult for Trump to pass the tax bill.

The Antipodeans advanced in Asia on the back of weaker DXY and a broad-based recovery in the commodities’ space while the safe-haven Yen recovered ground across the board on negative Asian equities and the US political setback.

Main topics in Asia

RBA's Lowe: Australian's to hold bulk of money in bank deposits

RBA's Lowe is speaking at an event entitled, "An electronic Aussie" with an address to the 2017 Australian Payment Summit. 

Consumer confidence surprised to the upside - Westpac

"The Westpac Melbourne Institute Index of Consumer Sentiment rose 3.6% to 103.3 in December from 99.7 in November."

ADB raises 2017 growth forecast for developing Asia - Nikkei

In its latest Asian Development Outlook Supplement report published on Wednesday, the Asian Development Bank (ADB) raised its economic growth outlook for Asia in 2017.

Trump candidate loses Alabama US Senate race, tax bill now harder to pass

The news is crossing the wires via Reuters that Trump candidate Moore lost in hard-fought Alabama US Senate race. Democrat candidate Jones has come out victorious. 

US Pres Trump puts pressure on China to cut off oil exports to Pyongyang - FT

The Financial Times (FT) reports that the Trump administration is exerting pressure on China to cut off oil exports to North Korea, stepping up efforts to convince the North’s leader Kim Jong Un to abandon his nuclear and ballistic missile programmes.

OPEC's Barkindo - oil rebalancing on its way

Comments from OPEC Secretary General Mohammed Barkindo are crossing the wires via Bloomberg.

Key Focus ahead

After a quiet Asian session, in terms of the economic releases, there are plenty of risk events lined for release as we head into early Europe. The German final CPI and WPI data will be reported ahead of the European open, followed by the Eurozone employment and industrial production data due on the cards in the European session. Meanwhile, the UK labor market report will hog the limelight today, especially after yesterday’s stronger CPI data and ahead of the BOE monetary policy decision due this Thursday.

From the US docket, all eyes will remain on the CPI numbers and EIA crude inventory report ahead of the closely-watched FOMC interest rates decision and economic projections due later in the American afternoon.

GBP/USD - Negative set up ahead of the UK jobs report

UK data released yesterday showed inflation rose to 6-year high in November.  Still, the GBP/USD pair dropped to the two-week low of 1.3303 levels.

EUR/USD: Range-play to extend ahead of US CPI, FOMC

The EUR/USD pair stalled its overnight recovery in Asia, now consolidating near mid-1.17s, awaiting fresh directional impetus from the upcoming US CPI numbers and outcome of the final Fed meeting due later on Wednesday. 

US: Expect a 0.402% m-o-m increase in headline CPI inflation - Nomura

Analysts at Nomura offer a brief preview on what to expect from today’s US CPI data release due on the cards at 1330 GMT.

FOMC to raise the federal funds rate by 25bp – HSBC

HSBC Analysts offered their thoughts on what the Federal Reserve (Fed) is likely to announce at its final monetary policy meeting of this year.