The overnight US-China trade optimism was watered down by the comments from the White House Adviser Navarro that curbed the risk appetite across Asia. The market mood turned sour after Navarro denied any agreement on the removal of the existing tariffs on China, with the Asian equities paring back the early gains. Treasury yields also pulled back from three-month tops while US equity futures dropped about 0.30%. The US dollar, however, remained closed to three-week highs vs. its main peers.
Amongst the G10 currencies, the Aussie was the biggest loser, weighed down by the latest trade deal doubts and dovish RBA Statement on Monetary Policy (SoMP), as markets overlooked the upbeat Chinese trade figures. AUD/USD failed several attempts above the 0.69 handle, having lost over 0.25% to hit session lows at 0.6875. The Kiwi also felt the pull of gravity, but the losses remain capped ahead of the 0.6350 level. Meanwhile, the safe-haven Yen recovered from half-yearly lows vs. the greenback but the USD/JPY bulls manage to defend the immediate support near 109.15. The USD/CAD pair, on the other hand, moved upwards towards the 1.3200 mark, mainly driven by the weakness in oil prices. Gold prices consolidated Thursday’s extensive drop around 1470 levels.
Heading into the European morning trades, both the European currencies, the EUR/USD and Cable trade almost unchanged, as they take a breather after a volatile session witnessed a day before.
Main Topics in Asia
US-China trade updates
WH Eco. Adviser Kudlow: There'll be tough concessions if there's Phase One deal
White House Spokesman: 'Very optimistic' will soon reach China deal – Fox News
Other key headlines
EU’s Juncker does not think US Pres. Trump will implement auto tariffs on EU automobiles
Japan’s Household Spending rises 9.5% YoY in Sept, fastest pace on record
Japan PM Abe to instruct ministers to compile stimulus package - NHK
RBA SoMP: Board prepared to ease policy further if needed
Fed’s Bostic: Not hearing any hints suggesting that consumer spending is slowing
Moody's lowers India's outlook to 'negative' from 'stable'
China’s Vice Premier Liu: Chinese economy is stable amid challenges
Moody's lowers India's outlook to 'negative' from 'stable'
China’s Oct trade data (CNY): Surplus – a big beat on expectations
Key Focus Ahead
The immediate focus is on the German Trade Balance and Current Account data scheduled at 0700 GMT, in the wake of easing US-China trade war impact. Ahead of the German data, the Swiss Unemployment Rate will be published, which is unlikely to have any impact on the Swissie. The UK docket remains absolutely data-empty and therefore, the sentiment around the pound will be mainly driven by the BOE aftermath.
The NA session sees the Canadian Labor Market report dropping in at 1330 GMT, followed by the US Wholesale Inventories and the key Preliminary Michigan Consumer Sentiment Index lined up for release at 1500 GMT. Meanwhile, the speech by the Fed Official Brainard will be closely heard after the hawkish comments from the Atlanta Fed President Bostic delivered in early Asia. For the oil market, the Baker Hughes US Oil Rig Count data will be next of relevance.
The US-China trade deal-related updates will continue to play and have a strong bearing on the risk sentiment, eventually impacting the fx board.
EUR/USD defends key support, focus on US Treasury yields
EUR/USD is attempting a bounce from the 50-day average support. US 10-year yield has pulled back from three-month highs. Risk-off, if any, could bode well for the EUR. On the data front, the German trade and US Michigan Consumer Sentiment Index are due for release and could influence EUR/USD.
GBP/USD in post-BOE bearish consolidation above 1.2800
The recovery attempts in GBP/USD continue to face stiff resistance near 1.2825 region, leaving the spot in a downside consolidation phase above the 1.28 handle, as the dust settles over the dovish BOE monetary policy decision aftermath.
US Michigan Consumer Sentiment Preview: The Beijing express arrives in the station
Sentiment to rise modestly in November continuing recovery. Labor market strength in job and wages underpinning outlook. China trade deal unlikely to have any positive effect as yet.
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
EUR/USD stays in daily range slightly below 1.0900
EUR/USD continues to move up and down in a narrow band slightly below 1.0900 in the second half of the day on Monday. The modest improvement seen in risk mood makes it difficult for the US Dollar to find demand and helps the pair stay in range.
GBP/USD treads water above 1.2900 amid risk recovery
GBP/USD is keeping its range play intact above 1.2900 in the American session on Monday. The positive shift seen in risk sentiment doesn't allow the US Dollar to gather strength and helps the pair hold its ground ahead of this week's key data releases.
Gold struggles to hold above $2,400
Gold loses its traction and trades in negative territory below $2,400 after suffering large losses in the second half of the previous week. The benchmark 10-year US Treasury bond yield holds above 4.2% and risk flows return to markets, not allowing XAU/USD to rebound.
Solana could cross $200 if these three conditions are met
Solana corrects lower at around $180 and halts its rally towards the psychologically important $200 level early on Monday. The Ethereum competitor has noted a consistent increase in the number of active and new addresses in its network throughout July.
Election volatility and tech earnings take centre stage
/stock-market-graph-gm532464153-55981218_XtraSmall.jpg)
The US Dollar managed to end the week higher as Trump Trades ensued. Safe-havens CHF and JPY were also higher while activity currencies such as NOK and NZD underperformed.