Forex Today: Kiwi dives on RBNZ dovish shift, all eyes on Brexit indicative votes
|Moderate risk-aversion and Reserve Bank of New Zealand’s dovish signal were the main themes in Wednesday’s Asian trading that triggered some volatility across the fx space. The Kiwi got battered and dropped more than a big figure just below the 0.68 handle, as the RBNZ monetary policy statement flagged a November rate cut. The Aussie tracked the sharp sell-off in its OZ peer and breached the 0.7100 support while terrible Chinese industrial profits data also weighed heavily on the risk asset.
Meanwhile, the USD/JPY pair maintained its range trade around the 110 handle, little impressed by the fresh advance in the US dollar index amid subdued trading activity in the Treasury yields and mixed Asian equities. Both the pound and the Euro remained under pressure ahead of the parliamentary Brexit votes and the European Central Bank (ECB) President Draghi’s speech.
On the commodities front, both crude benchmarks traded modestly flat, with WTI hovering near the 60 mark, with the upside capped by the API stock build. Meanwhile, gold prices on Comex remained sidelined near 1320 levels, awaiting fresh catalysts.
Main Topics in Asia
WTI: Buyers remain present despite API stock build
China business activity recovering thanks to "credit-soaked" quarter - CBB Survey
Trump’s Fed nominee suggests immediate 50 bps rate-cut
Brexit turmoil hits UK firms' hiring and investment plans - REC survey
RBNZ holds at 1.75%, but 'Next rate move is likely down' sends NZD/USD down
New Zealand 10-year bond yield hits record low
Overnight index swaps now see 71% chance of RBNZ rate cut in August - Bloomberg
China's industrial profits shrink most since late 2011 - Reuters
USD/CNH recovers losses on dismal China data
Asian stocks show mixed results as traders doubt global economic strength
Key Focus Ahead
After a volatile Asian session, markets look forward to the EU session that remains a thin-showing in terms of the economic releases, but a plethora of speeches by the ECB policymakers may keep the EUR, GBP traders busy amid the release of the UK CBI realized sales data due at 1100 GMT.
The NA session is relatively eventful, with the US and Canadian trade report due on the cards at 1230 GMT, followed by the US EIA weekly crude stockpiles data at 1430 GMT and US Q4 current account figures dropping in at 1500 GMT. However, a slew of Brexit indicative votes by the UK lawmakers scheduled at 1930 GMT is likely to hog the limelight today, as markets eagerly await some clarity on the Brexit issue heading closer towards the extended April 12th deadline.
Following is the list of the central bankers' speeches scheduled in the day ahead:
0800 GMT - ECB President Draghi
0800 GMT - ECB's Nowotny
0845 GMT - ECB's Praet
1000 GMT - ECB's Lautenschlaeger
1045 GMT - ECB's de Guindos
1330 GMT - ECB's Mersch
1730 GMT - ECB's Villeroy
2130 GMT – Fed’s George
EUR/USD is on the defensive, having closed below 1.1280 (61.8% Fib R of 1.1176/1.1448) yesterday and the spread between the US and German 10-year bond yields is flashing early signs of bullish reversal ahead of the European Central Bank (ECB) President Draghi's speech.
GBP/USD slips below 1.3200 ahead of UK parliamentary Brexit vote
Doubts over the future Brexit proceedings weigh on the GBP/USD amid greenback’s safe haven demand. The 50-day SMA can offer strong support while 1.3380 likely being the crucial resistance.
Gold Technical Analysis: Sidelined near $1,315 with bear flag on hourly, focus on today's close
The probability of gold closing below $1,312 would rise if the bear flag seen in the hourly chart is breached to the downside. That bearish continuation usually accelerates the preceding bearish move.
#1: Parliament Did Not Take Control of Brexit #2: Radical Plan For Tories
The UK parliament cannot wrest control of Brexit against May's will. The Tories may have a small window of opportunity if they agree to change the rules, then quickly act on it.
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