A sharp slowdown in the Australian economic growth in the fourth quarter hurt the sentiment around the Aussie-dollar, knocking-off the AUD/USD pair to two-month lows near 0.7030. The Kiwi tracked the sharp decline its OZ peer and dropped to thee-week lows of 0.6754. Amid downbeat Aussie fundamentals and increased RBA rate cut calls, Asia witnessed softer risk tones, and hence, the Yen remained better bid against the US dollar near 111.80 levels. Meanwhile, the Cable headed back towards the 1.3100 support following the reports of the EU-UK deadlock on the Brexit deal yet again. The EUR/USD pair traded with a bearish leaning just under the 1.13 handle, as investors favored the greenback amid mixed Asian equities and China growth concerns.
On the commodities front, both crude benchmarks dropped nearly 1% ahead of the US EIA weekly crude supplies report while gold prices on Comex looked to regain 1290 levels amid moderate risk-aversion.
Main Topics in Asia
RBA's Lowe says RBA has the flexibility to adjust MP in either direction
RBA Lowe: Q4 and Q3 GDP likely to show growth significantly below trend
Aussie GDP comes in as a miss of 0.2% Y/Y and a miss of 0.1% Q/Q (Aussie lower)
Australia: Online Retail Sales Index contracted -0.5% in January - NAB
Reuters poll: Brexit to be delayed to after March 29, say 51 of 54 economists
Australia's Frydenberg: GDP showing some moderation
BoJ increases the amount of JGB buys to JPY 480 bn, Yen unfazed
BOJ's Harada: Sales tax hike could cause a recession / weaken inflation
BoJ’s Harada: Will ease further if risks threaten price target
WTI Technical Analysis: Bears testing bull commitments at key trend-line supports
EU-UK struggle for Brexit deal in Brussels, talks to continue on Wednesday
UK’s Smith: Soft Brexit could be result if May deal rejected again – The Guardian
Gold: Bulls and bears spar around $1287
Key Focus Ahead
Heading into the European open, markets eagerly await the outcome of the further Brexit negotiations between Britain’s top government officials and the European Union (EU) Chief Brexit Negotiator Barnier, as both the sides try the last effort to clinch a Brexit deal. The fx space will be driven by Brexit updates, USD dynamics and the sentiment on the European equities amid a data-dry EUR calendar. However, the speech by the BOE MPC member Cunliffe’s speech will be eyed at 1215 GMT for some GBP moves.
The US ADP jobs report will hog the limelight pre-US open at 1315 GMT, soon followed by the US and Canadian trade data releases at 1330 GMT. The main highlight for the NA session today remains the Bank of Canada (BOC) rate decision that is due at 1500 GMT alongside the release of the Ivey PMI for February. The BOC is widely expected to keep the rates unchanged at 1.75% amid a cautious stance on the economic interest rate outlook. The CAD traders will also look forward to the EIA crude stockpiles data due at 1530 GMT for any impact on oil prices.
Later in the American mid-morning, around 1700 GMT, the speeches by the FOMC member Williams and BOE MPC members Saunders will remain in focus ahead of the Fed’s Beige book release at 1900 GMT and Aussie construction index data by AIG (due at 2130 GMT).
EUR/USD dips below 61.8% Fib support, eyes US ADP
A better-than-expected ADP could yield a deeper drop toward 1.1250, while a big miss on expectations could fuel a corrective bounce to the 5-day MA, currently at 1.1335.
GBP/USD struggles around a week’s low as EU-UK leaders jostle for soft/delayed Brexit
The results of the EU-UK leaders’ meet in Brussels could act as a frontline catalyst for the pair whereas trade updates and the US ADP employment change (expected 189K against 213K) could further validate the moves.
EURO Breaks 1.13, USD/CAD Eyes 1.34 - What to Expect from Bank of Canada
The focus shifts to the Canadian dollar with the Bank of Canada making a monetary policy announcement tomorrow. The Bank of Canada also has a lot to consider this month because while the labor market is strong the rest of the economy is weak.
BOC to retain its cautious, data-dependent stance – Barclays
In the view of the Barclays Research Team, the Bank of Canada (BOC) is expected to leave its benchmark interest rate unchanged at its monetary policy meeting due later on Wednesday at 1500 GMT.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Australian Dollar appreciates despite stronger US Dollar, PMI awaited
The Australian Dollar (AUD) continues to strengthen against the US Dollar (USD) following the release of mixed Judo Bank Purchasing Managers' Index (PMI) data from Australia on Friday. The AUD also benefits from a hawkish outlook by the Reserve Bank of Australia (RBA) regarding future interest rate decisions.
Japanese Yen remains on the front foot against USD, bulls seem non-committed
The Japanese Yen (JPY) attracts some buyers for the second straight day on Friday amid reviving bets for more interest rate hikes by the Bank of Japan (BoJ), though it lacks any follow-through.
Gold advances to near two-week high, eyes $2,700 on geopolitical tensions
Gold price (XAU/USD) prolongs its uptrend for the fifth consecutive day on Friday and climbs to a nearly two-week top, around the $2,690-2,691 area during the Asian session. Intensifying Russia-Ukraine tensions force investors to take refuge in traditional safe-haven assets and turn out to be a key factor underpinning the precious metal.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.