Forex today: Yen rises on caution ahead of US-China trade talks, Brexit uncertainties prevail, traders eye Powell's speech


Safe-haven Japanese Yen caught some bids in early Asian trade on Monday in reaction to media reports that China wants the scope of this week's trade talks and any deal with the United States to be narrow. The impact, so far, has been limited ahead of the resumption of the US-China trade talks later this week. Chinese Vice Premier Liu He meets U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington on Thursday and Friday.
 
On the other hand, the US Dollar remained on the defensive amid growing speculations that the Fed will cut interest rates again at its upcoming policy meeting on October 29-30 in order to support the economy. Friday's mixed US monthly jobs report did little to influence market expectations, albeit a modest uptick in the US Treasury bond yields helped limit any deeper losses.
 
On the Brexit related front, The Telegraph reported that the UK PM Boris Johnson would veto the EU’s seven-year budget and send a Eurosceptic commissioner to Brussels to “disrupt” the bloc’s workings if he were forced into a Brexit delay. Against the backdrop of Friday's Brexit-related headlines, wherein the European parliament president was reported to have rejected Johnson's new Brexit proposal, the latest development might continue to weigh on the British Pound.

Main Topics in Asia

Fed George: if data points weaker easier policy may be appropriate
 
China's forex reserves fell by $14.8 billion in September
 
Michel Barnier: blame Boris Johnson for a no-deal Brexit - The Guardian
 
Britain's Johnson asks France's Macron to push forward on Brexit

Key Focus Ahead

Meanwhile, other G10 currencies witnessed a lacklustre trading action and remained well within the previous session's broader range amid thin early Monday trade and absent relevant market moving economic releases. Moving ahead, the Fed Chair Jerome Powell's scheduled speech, due later during the US session, will now be looked upon for fresh clues about the US central bank's near-term policy outlook, which might eventually influence the USD price dynamics and produce some meaningful trading opportunities.
 
GBP/USD in search of a firm direction; stuck in a familiar trading range
The GBP/USD pair extended its sideways consolidative price action through the Asian session on Monday and remained well within a broader trading range held over the past one week or so.
 
EUR/USD technical analysis: Better bid, 4H 100MA is key hurdle
The currency pair looks set to challenge 1.0991 – the 4-hour chart 100-candle moving average (MA). That average has proved a tough nut to crack at least two times in the last four days.
 
Gold sits pretty in $1500 handle ahead of trade talks 
The yellow metal, gold, is relatively flat at the start of this week with both Australia and China out on holidays. The price is back above the psychological $1,500's and sights are set for higher levels as we head over to trade talk territories.
 
Optimism around US-China trade deal has often been misplaced – ING 
The is some optimism around the resumption of the US-China trade talks this week but this has often in the past been misplaced, writes Robert Carnell - Chief Economist Head of Research Asia-Pacific at ING.

GMT
Event
Vol.
Actual
Consensus
Previous
Sunday, Oct 06
24h
 
 
Monday, Oct 07
05:00
 
101.1
99.7
05:00
 
93.6
93.7
06:00
 
-1.5%
-2.7%
06:00
 
-4.6%
-5.6%
07:00
 
 
767B
07:30
 
0.1%
0.3%
07:30
 
1.6%
1.8%
08:30
 
-13.0
-11.1
15:30
 
 
1.795%
15:30
 
 
1.84%
17:00
 
 
19:00
 
$18.20B
$23.29B
23:01
 
0.0%
-0.5%

 

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