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The extension of dovish FOMC led US dollar weakness emerged the main underlying theme in Asia this Thursday, keeping the sentiment buoyed around most majors. The Antipodeans benefited the most, as the risk-on wave gripped the Asian markets amid dovish Fed, US-China trade deal hopes and upbeat Chinese official manufacturing and service PMI reports. The Aussie reverted to 8-week highs near 0.7273 while the bird held onto the upside above the 0.69 handle. The USD/JPY pair refreshed two-week lows near 108.70 region, as the sell-off in Treasury yields offset the risk-on tones. The non-yielding gold (futures on Comex) headed back to nine-month tops at 1323.15 while both crude benchmarks rallied hard, collaborating to the latest leg higher in the Loonie.
Among the European currencies, the Cable regained the upside momentum and turned higher towards the midpoint of the 1.31 handle while EUR/USD traded firmer and printed fresh three-month tops above 1.1500.
Main Topics in Asia
BoJ Summary of Opinions: Room for current JGB purchases to be revised
UK PM May plans to entice Labour MPs with cash to support her Brexit deal – UK Times
S&P raises New Zealand outlook to positive, NZD/USD adds 24 pips
China NBS manufacturing PMI rises to 49.5, Non-manufacturing PMI jumps to 54.7
UK consumer confidence remains at lowest since July 2013 ahead of Brexit
Gold Technical Analysis: runs into 78.6% Fib of $1,321, 4H RSI and MACD diverge
Asian stocks cheer dovish Fed, hit four-month highs
Goldman Sachs slashes odds of a March Fed hike to less than 5% vs. 10% previous
Australia’s fifth biggest home loan lender hikes mortgage rates
Fitch affirms New Zealand’s AA rating, stable outlook
BoJ’s Amamiya: Fed policy that keeps US economy strong is good for Japan’s economy too
Oil jumps to highest since Nov. 21 as Saudi cut supplies to US
Key Focus Ahead
Today’s EUR macro calendar see the release of the German retail sales at 0700 GMT, followed by the German jobless rate at 0855 GMT, both of which are likely to have virtually no impact on the markets. Hence, all eyes remain on the Eurozone Prelim Flash GDP reading for the fourth quarter 2018 that will drop in at 10000 GMT alongside the bloc’s unemployment rate.
In the NA session, the Canadian monthly GDP release for November will headline at 1330 GMT, with the US jobless claims to be released parallely. Apart from the data, the speeches by the ECB Governing Council member Mersch, ECB Vice-President Weidmann and BOC board member Wilkins will keep the traders busy.
The main highlight for today remains the meeting between the US President Trump and China’s Vice Premier Liu scheduled at 1930 GMT, with the central focus on the trade resolution. The US-China trade related headlines are likely to attract a lot of eyeballs in the session ahead that could drive the overall market sentiment.
EUR/USD: Focus shifts to Eurozone GDP after dovish Fed
A better-than-expected Eurozone GDP would only accentuate bullish pressures and allow a sustained rally to 1.16 and above. The EUR/USD pair clocked a 20-day high of 1.1508 in Asia and could soon test monthly highs near 1.1570, courtesy of the dovish Fed.
GBP/USD looking to test post-FOMC highs near 1.3150
The GBP/USD pair is on a steady rise so far this Thursday and looks to test the post-FOMC highs at 1.3146, having paused its overnight retreat just ahead of the 1.3100 level.
US President Trump to meet with Chinese Vice Premier Liu at 1930 GMT
Reuters is out with the latest headlines, confirming that the US President Donald Trump will meet the Chinese Vice Premier Liu He in the Oval office to discuss trade at 1530 ET, i.e, 1930 GMT.
Markets: Trade policy and China are major risks – Westpac
Bill Evans, chief economist at Westpac, suggests that while ongoing trade tensions will unnerve markets, it seems unlikely that the Chinese authorities will be prepared to make the specific changes to their industry and trade policies that would satisfy the US.