Forex today in Asia was characterized by minimal volatility and tight trading ranges, as the dust settled over the US mid-term elections aftermath. The US dollar staged a solid comeback across its major rivals, having almost reversed a Democrats win induced sell-off seen a day before. The USD/JPY traded firmer and headed for a test of the 113.85 barrier amid risk-on action on the Asian equities and higher Treasury yields. The Aussie also derived support from a big beat on the Chinese exports and imports data while improved risk appetite also underpinned. The Kiwi advanced, but remained capped below the 0.68 handle after the RBNZ left the cash rate unchanged and retained the dovish tone.
Among other majors, the EUR and the pound were buoyed by some optimism over the European politics while the Loonie benefited from a rebound in oil prices on fresh OPEC output cuts talks. Gold inched lower near 1225 level, slightly cautious heading into the FOMC rate decision.
Main Topics in Asia
Japan data sees Machine orders decline, Bank Lending contracts
BoJ Summary of Opinions: Inflation to increase "gradually"
RBNZ Gov Orr: Keeping stimulative policy for now
US Dem Pelosi: ready to pursue Trump oversight - Reuters
China to levy anti-dumping duties on rubber from S. Korea and Japan
China’s Oct trade balance (CNY): Exports and imports jump – a big beat
China’s October trade data (USD): Surplus expands 34.01bn, in line with estimates
US to impose new duties on Chinese aluminium sheet products - Reuters
Asian stocks up across the board as post-US election risk bid continue
Key Focus Ahead
A quiet EUR calendar this Thursday, sees the second-liner Swiss jobless rate at 0645 GMT, soon followed by the German trade balance at 0700 GMT. The EU economic bulletin, as well as the European Commission’s growth forecasts, will be published later in the European session.
The NA session remains eventful, with the Canadian housing data on the cards alongside the weekly US jobless claims release. Besides, speeches by the ECB President Draghi and Governing Council member Coeure will be due after 1400 GMT. The main event risk for today remains the FOMC monetary policy announcement due later at 1900 GMT.
EUR/USD: Indecisive breakout, focus on the FOMC rate decision
A close below 1.1395 looks likely as the Fed-ECB monetary policy divergence is set to grow further in the near future. The Fed is likely to keep rates unchanged today and signal a December rate hike.
GBP/USD trying to put in a floor at 1.3100 before stretching higher
Little data of note is slated for the economic calendar for Thursday, but GBP traders will be gearing up for the UK's GDP reading, due on Friday, and Brexit headlines continuing to leak out of the UK are suggesting that …
FOMC Preview & Post Election Outlook for the Dollar
With the US Midterm Elections behind us and the Democrats victory in the House the U.S. dollar ended the day lower against most of the major currencies. Looking ahead, we have a Federal Reserve monetary policy announcement on Thursday.
RBA SoMP: Expect no revisions to growth forecasts - HSBC
Analysts at HSBC offer a brief preview of Friday’s Reserve Bank of Australia’s (RBA) Statement of Monetary Policy (SoMP) due at 0030 GMT.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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