Forex Today: Yen firmer on US-China trade risks; UK politics/ Brexit drama in focus


Forex today in Asia steadied following a volatile start, with improved risk sentiment dominating, despite a weaker Yuan fix by the PBOC and weekend’s fresh US-China trade comments by the US President Trump. The Asian markets traded firmer alongside the Treasury yields while the US dollar index traded with caution vs. its main competitors after a sharp downward spike to 97.03 in early thin trading. Gold prices treaded water below 1500 levels amid mixed cues and ahead of key US macro data in the week ahead.

Amongst the G10 currencies, the Yen was the best performer, having sent the USD/JPY pair to 105.31 lows before recovering to 105.50 region. The Antipodeans traded with minor gains amid lingering trade worries and central banks’ easing bias. The Kiwi staged a solid bounce from 0.6439 lows and consolidated near-daily tops of 0.6475. The NZD fell after New Zealand’s Treasury said the RBNZ could cut its interest rates to minus in a crisis situation. Meanwhile, the Aussie’s recovery was capped below the 0.68 handle, in the facing falling Chinese iron-ore and oil prices.

Heading into Europe, EUR/USD managed to gains above the 1.12 handle amid Italian political scenario uncertainty. The Cable paused the early declines ahead of the 1.20 handle, but remains vulnerable, as heightened no deal Brexit risks continue to weigh.

Main Topics in Asia

US-China trade updates

WH Advisor Navarro: Plan to have Chinese negotiators come to US - CNBC

China wants to reach a deal, but will always reject US bullying deal – Global Times

'Chexit': China might just exit the multilateral order, if the US pushes it too hard - SCMP

Other key headlines

Brexit: Corbyn tabling a motion of no confidence and MPs pressure Johnson's “do or die” pledge - Times and Telegraph

New Zealand Treasury: RBNZ could cut OCR to minus 0.35% in a crisis

NZ PM Ardern: Economy in good shape, low rates a global phenomenon

PBOC sets Yuan reference rate at 7.0211

Goldman Sachs lowers US fourth quarter GDP forecast

Gold: Buyers and sellers jostle around $1496

WH Communications Director: Pres. Trump may need to be replaced for 2020

Brent technical analysis: Recovers from 7.5-month lows forming a bear flag

AUD bearish: Dalian Iron-ore prices slump on rising supply risks

Asian stocks rise despite lingering trade concerns

Key Focus Ahead

We have a quiet start to a busy week ahead, on the economic news front, with an empty docket on both sides of Atlantic this Monday. However, the US Monthly Budget Statement and Reserve Bank of Australia’s (RBA) board member Kent’s speech. due at 1800 GMT and 2200 GMT respectively, will be closely eyed.

The main focus will remain on the US-China trade-related headlines, UK political developments for fresh trading impetus in the week ahead.

EUR/USD resilient despite the spike in Italy-German yield spread

EUR/USD eked out moderate gains on Friday despite the big rise in the Italy-German yield differential and remains bid above 1.12 ahead of the London open. The upside, however, could be capped by Italian uncertainty.

GBP/USD: Bears await major trade/UK political news to break below 1.2000

GBP/USD refrains from breaking the 1.2000 mark amid lack of major clues. Brexit headlines keep increasing odds of a no-deal exit with the latest ones coming from Ireland. UK politicians secretly plot against PM Johnson’s position in the case of a no-confidence vote failure.

Week ahead – Markets set to quiet down, despite tug of trade war

It may be a quiet week in financial markets, with no central bank meetings or any other major events on the agenda, as the summer lull finally kicks in. Economic data will, therefore, attract most of the attention, though any tweets on the trade war or Brexit news could always stir things up.

GBP/USD Forecast: Bears breaking the pound with Boris Johnson's Brexit, looming recession

Concerns about a hard Brexit and three top-tier British figures stand out this week. Mid-August's daily chart is pointing to further losses. Experts are bullish in the medium and long terms, but see depressed prices in the upcoming week.

GMT
Event
Vol.
Actual
Consensus
Previous
Sunday, Aug 11
24h
 
 
Monday, Aug 12
15:30
 
 
1.99%
15:30
 
 
1.95%
16:00
 
 
18:00
 
$-6.4B
$-8.0B
22:00
 
 
22:45
 
0.4%
-0.7%
23:50
 
-0.5%
-0.1%
23:50
 
0.1%
-0.5%
Tuesday, Aug 13
01:30
 
1
3
01:30
 
3
2
04:30
 
-0.2%
-0.2%
06:00
 
 
-0.5%
06:00
 
 
0.3%
06:00
 
0.5%
0.5%
06:00
 
1.7%
1.7%
06:00
 
0.1%
0.4%
06:00
 
1.1%
1.1%
06:00
 
 
-38%
08:30
 
3.7%
3.4%
08:30
 
3.8%
3.8%
08:30
 
3.8%
3.6%
08:30
 
22.8K
38.0K
08:30
 
 
3.2%
09:00
 
5.0
-1.1
09:00
 
-3.1
-20.3

 

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