Forex Today: Markets remain range-bound ahead of RBA’s Lowe’s speech, Brexit drama
- Optimism surrounding the US-China trade deal, receding odds of a hard Brexit keep bears away.
- An absence of major catalysts limits market moves amid signals from PBOC, Hong Kong and the US House speaker.
Choppy trading activity continues ahead of the key events during pre-European open on Tuesday. Early-day news concerning the US-side efforts to ease trade discussions, up for November, joined speculations of the UK PM’s efforts to get the snap election passed through the House. However, PBOC’s weakest Yuan fix since late-August and noise surrounding Hong Kong seem to have exerted downside pressure on the market’s risk tone. Also questioning the bulls is increasing odds of the impeachment of United States’ (US) President Donald Trump as the House is up for voting on further investigation.
The US Dollar (USD) is on its recovery after the week-start loss while the Antipodeans await further clues from the trade front despite the New Zealand Dollar’s (NZD) strength amid upbeat statement from the Reserve Bank of New Zealand (RBNZ) policymaker. Further, safe-havens stay on the back foot while Oil also weakens amid concerns of the higher stockpile. Moving on, the British Pound (GBP) and the Euro (EUR) follows the overall mild weakness against the greenback ahead of the key vote on the United Kingdom’s (UK) Prime Minister’s (PM) snap election motion. It’s worth mentioning that a lack of major change in Japan’s inflation statistics and comments from Japanese diplomats failed to offer any strong direction to markets while the US 10-year treasury yields remain mostly unchanged around 1.85%.
Main Topics in Asia
House to vote on impeachment procedures Thursday - WP
USTR to consider delay of further tariffs on Chinese imports - RTRS
RBNZ: August rate cut should support a lift in inflation expectations
UK PM Johnson on course to win his fight for a pre-Christmas general election - The Sun
Japanese Tokyo Consumer Price Index (CPI): In line with expectations
Japan's Aso: Don't expect big pullback in demand after the sales tax hike
Japan's Nishimura: Government, BOJ will join forces to exit deflation
PBOC sets Yuan reference rate at strongest level since Aug. 26
Hong Kong's Lam: Will launch stimulus measures when unrest settles
Key Focus Ahead
With the comments from the Reserve Bank of Australia’s (RBA) Governor Philip Lowe on the cards, investors are less likely to focus on anything else ahead of the key event. Following the same, second-tier data from the US, comprising Pending Home Sales and Consumer Confidence, coupled with another Parliamentary drama in the UK, could entertain traders during the rest of the day.
While the RBA Governor could inflate the odds of the central bank’s moves and increase importance of this week’s inflation data, the UK PM’s efforts to alter the winning majority rule and readiness to scale back the election date might help his motion pass through the House of Commons and can offer another leg up to the British Pound (GBP).
Alternatively, rising odds of the US President’s impeachment and political pessimism surrounding Hong Kong may renew risk aversion should the present trade/Brexit optimism falter.
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