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Forex Today: Yen lifted by Asia risk-off, German IFO in focus

Risk sentiment remained softer in Tuesday’s Asian trading session, propping up the safe-haven demand for the Yen versus its American counterpart that knocked-off USD/JPY to the 112.50 level, despite Japan’s downward revision to its GDP growth forecasts. The Kiwi was lifted by upbeat New Zealand’s business confidence numbers, having regained the 0.6850 barrier while the Aussie’s upside was capped by the 0.72 handle, as the RBA minutes failed to impress the bulls. Both the Euro and pound traded modestly flat, as the US dollar picked up some strength heading towards a Fed rate hike due tomorrow.

Among the related markets, the Asian equities slipped, led by a 1.5% drop in the Japanese benchmark index, the Nikkei 225. Meanwhile, both crude benchmarks were sold-off into mounting global growth concerns, with WTI down -2.20% testing the 49.00 support. Gold prices on Comex eased-off four-day tops of 1252.95, but keeps 1250 level amid softer Treasury yields.

Main Topics in Asia

NZ confidence: key RBNZ risk retreats - TDS

RBA minutes: no strong case for a near-term adjustment in monetary policy

BCC: UK set for slowest growth since 2009 - Reuters

Five-year Japanese bond yield hits lowest since November 2017

Japan Cabinet Office lowers FY 2018, 2019 GDP growth forecasts

BOC Governor Poloz: Rates need to be more neutral with economy near capacity

Japan’s Asakawa: Yen movements are driven largely by capital flows

China's Xi: Reform and opening economy is never easy

China’s ForeignMin hopes for 'orderly' Brexit, calls for more open EU economy

Oil steepens decline, WTI under $50 as oversupply looms

Asian stocks continue the week's declines, Nikkei ticking into ¥21,100.00

Key Focus Ahead

Markets brace for the Swiss Govt (SECO) economic forecasts due to published at 0645 GMT while the European markets will see the German IFO survey for December. The headline business climate index is likely to deteriorate further to 101.7 versus 102.0 previous. The UK docket remains absolutely data-dry, as the Brexit-related headlines will continue to drive the GBP markets.

In the NA session, the US housing starts and building permits for November will drop in at 1330 GMT alongside the Canadian manufacturing shipments data for the month of October. Later, around 1400 GMT, New Zealand’s (NZ) fortnightly dairy auction results will be published by Fonterra. Also, of note remains the API crude stockpiles at 2130 GMT, soon followed by the NZ current account data at 2145 GMT.

EUR/USD: Bears trapped, focus on German IFO

The upside in EUR/USD, however, could be limited if the December IFO survey, due at 09:00 GMT, show a fourth consecutive dip in business confidence. That said, the outlook would turn bearish only below Monday's low of 1.1299.

GBP/USD drifting near 1.2600 as Brexit progress grinds to a halt

Tuesday sees the economic calendar free of UK data, and the run-up into Wednesday's calendar sees only mid-tier offerings on the docket as well, with Core CPI and Retail Price Indexes due in the mid-week.

UK PM May to present 3 Brexit countdown options to Cabinet – The Times

The UK Times carried a story earlier today, citing that the UK PM Theresa May is likely to present three Brexit countdown options to the Cabinet, according to Bloomberg.

Restricting options, May attempts to force a choice on Brexit

British Prime Minister May's best ally in her fight to gain Parliament approval for her Brexit deal is the lack options.

Are YOU Selling Dollars Pre-FOMC?

The last Federal Reserve monetary policy meeting in 2018 is this Wednesday and investors are selling dollars ahead of what is widely expected to be the fourth rate hike this year. 

EUR/USD should ultimately retrace to 1.0600 in Q1 2019 – Goldman Sachs

Analysts at the US investment banking giant offer Elliot waves (technical) analysis on the EUR/USD pair for the first quarter of 2019.


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