Risk-reset was the main underlying theme in Asia this Friday, as markets cheered US-China trade progress and the overnight bounce in the US Treasury yields. Despite higher Treasury yields, the US dollar stalled its bullish momentum and consolidated the recent gains across its main competitors. A better sentiment towards the risk assets lifted the Antipodeans, with the Aussie resting the 0.71 handle while the Kiwi advanced to 0.6800 levels. The USD/JPY pair witnessed some volatility amid Japanese fiscal year-end flows. The spot spiked to 110.92 highs amid mixed Japanese data and Finance Minister Aso’s comments, before retreating to 110.75 region, where it now wavers. Both the EUR and the pound attempted a rebound, as attention turns towards another Brexit vote and a raft of fresh macro news.
Among the related markets, the Asian stock markets traded higher, led by the rally in the Chinese stocks. Both crude benchmarks also advanced while gold prices on Comex extended its retreat below the 1300 level.
Main Topics in Asia
Fed’s Bullard: Normalization Process In US Is at an end going ‘as far as we can‘
Fed’s Bullard: Too early to say that treasury yield curve is signaling recession
U.S. orders foreign firms to further cut down on oil trades with Venezuela – Reuters
Significant chance of Fed rate cut in 2020 - Reuters poll
US Mnuchin: We had a productive working dinner last night, looking forward to today
UK Times: Deadlocked Britain faces further year before Brexit
Australia: Softness in private credit continues - Westpac
Japan's Finance Minister: Japan’s economy not particularly bad at the moment
USD/JPY hits 8-day highs above 110.90 despite Japan's Aso ruling out extra stimulus measures
China has ample room to maneuver on debt - FX Regulator
Brent Technical Analysis: Upside favored after bullish hammer
Key Focus Ahead
The immediate focus now remains on the February month’s German retail sales and import price index data that will kick-start a busy EUR calendar at 0700 GMT. Ahead in the session, the German jobs data will drop in at 0855 GMT, followed by the UK Q4 final GDP data due at 0930 GMT that will the business investment, current account and net lending to individuals data releases parallelly.
Despite a heavy UK docket, the GBP/USD price action may remain limited, as another Brexit vote looms later today at 1430 GMT. The UK PM Theresa May's government has proposed a vote on the Withdrawal Agreement that sets May 22nd as the exit date.
Further, the NA calendar is also a hectic one to wrap up a light week, as traders eye the US personal income, core PCE price index and Canadian GDP report, dropping in at 1230 GMT. Next of relevance remains the Michigan consumer sentiment and new home sales data due at 1400 GMT ahead of Baker Hughes oil rigs count data release at 1700 GMT.
Apart from the macro updates, the Fedspeak will also grab a lot of attention alongside the developments on the latest round of the US-China trade talks.
1325 GMT - Fed’s Williams
1430 GMT - Fed’s Kaplan
1605 GMT - Fed's Quarles
When are the German retail sales and how could they affect EUR/USD?
EUR/USD will likely drop to recent lows near 1.1170, if the German retail sales print below estimates. An above-forecast number may alleviate bearish pressures around the shared currency, although the technical bias will remain bearish while below 1.1304.
GBP/USD: Recovery capped around 1.3070/75 ahead of UK GDP, Brexit parliament vote
The GBP/USD pair recovered during the early-day trading but couldn’t clear 1.3070-75 resistance as investors turn cautious prior to the key events. Not only economic data from the UK and the US but Brexit parliament vote will also entertain investors during the day.
Gold: 100-day MA support could be tested for the first time since Nov. 28
Gold fell 1.49 percent yesterday – the biggest single-day drop since Mar. 1 – bolstering the bearish view put forward by the inside-day bearish reversal confirmation witnessed over the previous two trading days.
The UK publishes its final Gross Domestic Product report for the fourth quarter of 2018 on Friday, March 29th, at 9:30 GMT. The final report is projected to confirm the initial read: 0.2% QoQ and 1.3% YoY.
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