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
Other key headlines
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 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.
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.
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.