Tuesday’s Asian session was a mixed bag, as a sense of caution prevailed amid renewed trade concerns. Asian stocks slipped following the overnight Wall Street decline after US President Trump announced fresh tariffs on steel from Brazil and Argentina.
The US dollar embarked upon the road to recovery vs. its main competitors but remained miserable against the Antipodeans. The Aussie rallied to three-week highs near 0.6850 after Reserve Bank of Australia’s (RBA) announced no change to its Official Cash Rate (OCR). The Kiwi tracked the Aussie’s rally and regained the 0.65 handle.
The USD/JPY pair benefited from broad dollar recovery, an uptick in S&P 500 futures and the Treasury yields rebound. The spot kept its range around 109.15 region, reversing a dip to four-day lows of 108.93. The Canadian dollar attempted a tepid recovery and sent USD/CAD back in the red zone near 1.3300. Moderate gains in oil prices also aided CAD recovery.
Amongst the European currencies, EUR/USD consolidated the recent upsurge near 1.1070 levels while GBP/USD traded little changed below 1.2950 ahead of the UK Construction PMI release.
Main Topics in Asia
Key Focus Ahead
The EUR macro calendar this Tuesday is a thin-showing, in absence of first-tier economic data releases. Therefore, the Swiss Consumer Price Index (CPI), UK Construction PMI and Eurozone Producer Price Index (PPI) will keep the traders busy in the session ahead. Meanwhile, the UK political drama and trade-related headlines will continue to play out.
The NA session also lacks relevant macro news from both the US and Canada. However, New Zealand’s fortnightly dairy auction results (due around 1430 GMT), ECB Governing Council member Coeure’s speech and weekly US Crude Stocks data from the American Petroleum Institute (API) will be closely eyed.
EUR/USD printed the biggest single-day gain in 2.5-months on Monday. The uptick has neutralized the immediate bearish setup. A breakout, however, may remain elusive due to the US-France trade tensions.
GBP/USD registers losses for the first time in five days. Polls show receding leads of Tories over Labour. US President Trump’s London visit, British activity numbers will join trade/political headlines to offer a busy day.
USD/INR created an inside day candlestick pattern on Monday, signaling indecision in the market place. The candlestick pattern has weakened the immediate bullish view put forward by Friday’s falling channel breakout.
YouGov projects a Conservative majority of 68, Electoral Calculus 34, and a model of ComRes data yields 48. The YouGov Election Centre updates its model periodically.