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Forex Today: Kiwi – weakest in Asia, focus shifts to Eurozone CPI

Forex today witnessed moderate risk-aversion in Thursday’s Asian trading, as the sentiment soured following the reports that the US-China could be delayed while looming Brexit uncertainty also left markets scrambling for safety bets.

Therefore, the Yen picked up bids and bounced-off two-week lows against its US counterpart, keeping the USD/JPY pairing on the back foot near the 109 handle. The Aussie refreshed weekly lows at 0.7149 while the Kiwi emerged the main laggard amid weaker oil prices and mixed Asian equities. The spot fell back below the 0.6750 level, down -0.40% so far. Both the Euro and the GBP traded flat, leaning to the downside, as the greenback remained better bid across its main competitors.

Main Topics in Asia

Canada FinMin Morneau: Brexit not a problem for Canada, will hit global economy

Brexit news: Corbyn will not talk to PM May before a no-deal Brexit is off table - The Guardian

Fed's Kashkari: bank has room to cut rates in a fuure downturn

Over 170 UK business leaders urging 2nd Brexit referendum - The Guardian

PBOC’s Pan: China seeks more open, more transparent, more efficient bond market

Senator: Trump 'inclined' to impose new US auto tariffs – Reuters

Oil lagging on the tail end, WTI knocking back into $52.00

Ex-BoJ’s Hayakawa: Japan could enter recession as early as fall 2019, USD/JPY to hit 80s

US Senator Grassley: Government shutdown may delay trade talks

BoJ’s Kuroda: Greater risk that central banks will face zero lower bound problem amid low interest rate environment

Gold Technical Analysis: DXY recovery favors contracting triangle breakdown

Key Focus Ahead

The focus will be back on the fundamentals, with the Brexit vote and UK PM May’s leadership challenge now out of the way, although the Brexit-related headlines will continue to drive the sentiment around the major European currencies. Today’s EUR macro calendar sees the releases of the Eurozone final CPI at 1000 GMT alongside the Eurozone construction output numbers. Meanwhile, the UK docket remains absolutely data-empty.

The NA session offers plenty of event risks, including the US weekly jobless claims, Philly Fed manufacturing index and Canadian ADP employment change data, all of which will be released parallelly at 1330 GMT. Later in the American mid-morning, the speech by the FOMC member Quarles will be released at 1545 GMT. The US government shutdown will continue to remain a drag on the broader market sentiment.

EUR/USD: More pain ahead as risk reversals slide

The EUR/USD pair could be in for a deeper drop toward 1.13 as the risk reversals have hit one-month lows. The EUR, however, will likely find bids, if the GBP starts cheering the idea of a second Brexit referendum. 

GBP/USD hobbled under 1.2900 on refreshed Brexit uncertainty

The economic calendar is free of any UK data for Thursday, but with traders focused entirely on Brexit regardless, all eyes will be on continued headlines focusing on PM May.

Gov’t Shutdown, Trade War, and the Market

Deal or No Deal? That is the billion-dollar question on both sides of the Atlantic. Despite what we’ve been led to believe, the Federal Reserve Bank of the United States is not a benevolent government agency set up to act in the interest of the public. 

GBP/USD seen at 1.1000 on a hard Brexit - HSBC

Analysts at HSBC offer the outlook on the GBP/USD pair, in the wake of the three potential Brexit scenarios.


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