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Aussie rebounds amid Yuan strength, UK’s Brexit Plan B vote in focus

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Forex today witnessed some volatility in Tuesday’s Asian trading, but the moves were limited by caution trading, as the markets refrained from creating fresh bets ahead of the US-China trade talks and the FOMC decision.

Among the Asia-pac currencies, the Aussie was a quite a mover in Asia, having dropped sharply to 0.7140 region on awful NAB Australian business conditions data before reverting to the familiar region near 0.7170 levels on RBA board member Harper’s slightly hawkish comments and the Yuan strength. The Kiwi also stalled its downslide and bounced—back to the midpoint of the 0.68 handle, as the oil-price bounce added to the recovery momentum. Meanwhile, the USD/JPY pair dropped to weekly lows of 109.14, but quickly changed course and revisited daily highs of 109.39, as the Yen was sold-off into the Japanese government downgrade on its outlook for exports. Meanwhile, gold prices on Comex traded listless near seven-month tops of 1303.70, as the focus shifts to the two-day FOMC monetary policy meeting starting later today.

Main Topics in Asia

UK Home Office: Govt will seek to end free movement as soon as possible if no deal Brexit

Stats NZ: Dec 2018 trade deficit, the largest annual trade deficit in 11 years

Sources: Big divides remain as US-China trade talks resume – WSJ

Gold steadies near 7-month tops above $ 1300, focus on Fed, trade talks

NAB Australian business conditions worsen in December, arrive at 2 vs. 11 last

Japan’s Cabinet Office: Govt downgrades view on exports to showing `weak tone’

WTI looks to extend the recovery above $ 52, API data eyed

RBA’s Harper: Next bank rate move to be a hike

Australian PM Morrison: Small business instant asset write-off increased

China Foreign Ministry calls US to drop arrest warrant against Huawei executives

Key Focus Ahead

Tuesday’s EUR macro calendar remains data-light, with the only Swiss trade balance that will drop in at 0700 GMT. Hence, markets eagerly look forward to the NA session that sees the US CB consumer confidence data due at 1500 GMT among other minority data releases.

The main event risk for markets remain the UK Parliamentary vote on the UK PM May’s Brexit Plan B, which is likely to have a significant impact on the EUR, GBP markets heading into the FOMC decision due tomorrow.

EUR/USD: Upside appears capped by 100-DMA, focus on EUR/GBP

The pair is likely to get influenced by the sentiment around the greenback while the EUR/GBP flows will also have a major impact on the common currency heading into the UK Parliamentary vote on Brexit Plan B later on around 1900 GMT.

GBP/USD on the defensive near 1.3150 ahead of UK’s Brexit Plan B vote

The GBP/USD pair keeps its range trade intact around the midpoint of the 1.31 handle, as we progress towards the London markets, with the UK Parliament vote on Brexit Plan B amendments likely to headline.

How UK’s Brexit Plan B Vote Could Affect GBP

There are as many as 19 amendments but the Speaker at around 13 GMT will select the 6 most popular for debate and vote. Voting begins at 19 GMT and will take about 15 minutes per Amendment. 

Brexit deal amendments set to boost Sterling further

The UK government of Theresa May will try to get the Brexit deal approved in House of Commons after crushing defeat two weeks ago.

Conference Board Consumer Confidence Preview: Strength through adversity

The Consumer Confidence Index from the business organization the Conference Board is expected to decline to 124.9 in January from 128.1 in December. 

US Treasury Sec. Mnuchin: Trump to meet Chinese Vice Premier Liu for trade talks on Thursday

China Daily carried a report on Tuesday, quoting the US Treasury Secretary Mnuchin, as saying that “the US President Donald Trump on Thursday will meet Chinese Vice Premier Liu He during his visit to Washington for trade talks.”

 

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