Forex Today: Aussie cheers better Australian CPI, focus on German CPI, FOMC
Following the drama around the UK politics in the overnight trades, forex today in Asia traded cautiously, with most majors sticking to tight trade ranges heading into the crucial FOMC decision due later today.
The Aussie, however, emerged a big mover and rallied nearly 50-pips to test the 0.72 handle following upbeat Australian Q4 headline CPI figures and a stronger Yuan. The USD/CNY pair fell sharply amid fresh doubts over the US-China trade resolution and dovish Fed expectations. The Kiwi, followed suit, having jumped to 0.6850 levels. The USD/JPY pair, on the other hand, traded on the back foot near 109.35 amid weaker Treasury yields and Mixed Asian equities. Among the European currencies, the Cable’s recovery from weekly lows remained capped by the 1.31 handle amid UK PM May’s plan while EUR/USD retested the 1.1450 barrier.
On the commodities front, gold prices on Comex scaled fresh eight-month highs near 1314 levels while both crude benchmarks traded modestly flat, with WTI holding up near 53.50 region.
Main Topics in Asia
Irish ForeigMin McEntee: Backstop agreement not only reason withdrawal agreement failed in UK parliament
French President's Office: France will push forward with preparations for a no-deal Brexit scenario
Australia's Q4 CPI rises 0.5% q/q, beats estimates
Gold clocks 8-month highs, nears $ 1315 ahead of Fed, US-China trade talks
Oil flat lined in Asia amid Venezuela concerns and fears of global growth slowdown
Fed: FOMC will meet as planned, despite the inclement weather
Sources: US, China face deep trade, IP differences in high-level talks - Reuters
AUD bullish news: Goldman Sachs raises iron ore price forecasts
Asian stocks trade mixed, treasury yields drop ahead of Fed
Key Focus Ahead
Markers brace for the main event risk for today, the FOMC interest rates decision due to be announced at 1900 GMT, followed by the Fed Chair Powell’s press conference at 1930 GMT. Markets are expected the Fed to hint a pause in its policy normalization, in light of the US economic slowdown risks and trade worries.
Ahead of the Fed event, the calendar appears quite eventful, with a raft of the second-tier macro news due from the Euroland and the UK, including the UK net lending to individuals data and Eurozone consumer confidence and sentiment numbers. Meanwhile, the German Prelim CPI data for January will be closely eyed (due at 1300 GMT) ahead of the US ADP jobs report at 1315 GMT. Later in the NA session, the US pending home sales will drop in at 1500 GMT while the US EIA weekly fuel stocks data will be published at 1530 GMT.
EUR/USD: Focus on German CPI and FOMC rate decision
The dollar could pick up a strong bid, pushing the EUR/USD lower if Fed's Powell downplays recent reports that the central bank is planning to end the quantitative tightening program sooner-than-expected.
GBP/USD: Recovery appears shallow as UK PM May set to renegotiate with EU
The recovery in the GBP/USD pair from weekly lows of 1.3058 lost legs just shy of the 1.31 handle, as the bears keep the upside attempts capped amid the return of the Brexit deal-related uncertainty.
The British Gambit: How to convince your opponent you mean suicide
From the reaction to the vote in Parliament markets are unconvinced that Ms May has grasped the essential point that her only real leverage on the continent is the threat of a no-deal exit.
ADP Employment Preview: Reversion to the mean
American firms, ADP’s clients are expected to show 175,000 additions to their books in January. New hires will moderate from December’s surge of 271,000 employees to below the 12 month moving average of 206,000.
Fed Preview: Balance sheet to the fore
The Federal Open Market Committee, the policy making body of the US central bank is expected to keep its base rate at 2.5% at the conclusion of Wednesday’s two-day meeting.