Risk-aversion remained the main underlying theme in Asia this Thursday after Trump brought in fresh tariffs on auto imports while North Korea threatened to call-off the June Summit. The US dollar extended post-FOMC minutes weakness across its main competitors, offering some respite to the Antipodeans. However, the recovery gains remained capped amid negative Asian equities and weaker oil prices.
The Yen, on the other hand, continued to outperform and reached fresh weekly lows near 109.40 against its American peer. Another safe-haven, gold, also extended its corrective rally and looked set to test the $ 1300 mark amid the resurgence of global trade tensions.
Main topics in Asia
Trump's new US auto tariff proposal to weigh on risk
The WSJ has run an article in recent trade which could be a weight on market sentiment as trade war risk comes back to the fore.
USD/TRY retreats on much-needed intervention after Lira plummets past 4.925
The Lira tumbled 5.7% on Wednesday in the lead-up to intervention by the Turkish central bank, and the USD/TRY pair peaked at an all-time high of 4.9262 before the central bank …
Australia's RBA head warns about Chinese debt - Australian Financial Review
Australia's Reserve Bank of Australia head, Philip Lowe, spoke on Wednesday about the hazards posed to Australia from China due to the interconnected nature of their economies, as noted by the Australian Financial Review.
North Korea threatens to call off Summit, calls pence a ‘political dummy’ - WSJ
The Wall Street Journal (WSJ) reports comments from Choe Son Hui, North Korea’s Vice Minister of Foreign Affairs, with further insights on the earlier headlines that cited ‘North Korean official to suggest reconsidering US summit meeting - Korea press’.
BOJ's Sakurai: Yield curve control will boost inflation expectations
Bank of Japan (BOJ) board member Sakurai said on Thursday expressed confidence the stimulative effect of yield curve control policy will boost inflation expectations and stressed the BOJ needs to hit the price goal at the earliest date possible.
China Commerce Ministry: China does not pledge a number to US trade surplus cut
Following comments are reported by Reuters from China’s Commerce Ministry (MOFCOM), as China reacts to the latest US tariffs on autos.
Key Focus ahead
After a data-light Asian session, markets look forward to the European calendar, with plenty of event risks in stores for today. The German final GDP and GfK Consumer Climate will be reported in early Europe while the UK retail sales report is the only economic data due on the cards in the European session. However, a slew of speeches from the global central bankers will keep the traders busy.
0700 GMT - FOMC Dudley’s speech
0800 GMT – BOE Carney’s speech
0815 GMT – FOMC Williams’ speech
0830 GMT – ECB Praet’s speech
1030 GMT – ECB Praet’s speech (round 2)
Also, in focus remains the ECB May monetary policy meeting minutes that will be published at 1130 GMT. In the NA session, the US docket will see the usual weekly jobless claims release, followed by existing home sales data. Meanwhile, FOMC member Bostic, Harker will be seen speaking in the mid-American session. BOE Governor Carney will be seen back on the wires at 1700 GMT, speaking at the Society of Professional Economists' annual dinner, in London.
EUR/USD gasps for breath at 1.17 as the decline continues ahead of German GDP
The EUR/USD is trading around the 1.1700 level ahead of Thursday's European market session, and the pair is struggling to develop a bounce from Wednesday drop.
GBP/USD: Fed-BOE divergence hurts, eyes UK retail sales
The GBP/USD has been oversold for three weeks now, according to the 14-day relative strength index (RSI), still, the corrective rally remains elusive. The monetary policy divergence will likely widen further in a GBP-negative manner if the UK retail sales miss estimates.
UK retail sales to rebound in April - Barclays
The Barclays Research Team offers a sneak peek at what to expect from today’s UK retail sales slated for release at 0830 GMT.
Trump to appear in a Fox TV interview at 1000 GMT - Twitter
The US President Trump, in his latest tweet, announced his interview on Fox TV at 0600 AM NY Time (1000 GMT) later on Thursday.
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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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