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Forex Today: USD weakness extends into Asia, EZ PMIs, UK retail sales and BOE eyed

Less hawkish FOMC outcome induced broad-based US dollar weakness extended into Asia this Thursday, as the Asian traders reacted to the overnight Fed news and unwound their USD longs. The Fed dot plot showed two more rate hikes for this year, disappointing the expectations of four rate hikes in 2018.

Most majors benefited from the renewed dollar selling, with the Yen having emerged the top gainer amid weaker Treasury yields and increased safe-haven demand, in light of the fresh concerns over a potential China-US trade war. However, the Aussie was the exception, as the Australian employment data miss weighed down on the OZ currency.

Among other related markets, the Asian equities traded mixed for the second straight session, as the dust settled over the Fed aftermath. The Nikkei 225 index bucked the trend and kept losses on the back of a stronger Yen. Meanwhile, gold prices on Comex held onto the overnight gains and traded near $ 1330. Both crude benchmarks traded little changed, as markets digested the US EIA inventory report.

Main topics in Asia

Trump to sign memo on China tariffs at 12:30 p. EDT on Thursday – Reuters

President Donald Trumps will sign a memo at 12:30 p.m. EDT (1630 GMT) on Thursday imposing tariffs on Chinese imports in a move aimed at curbing theft of US technology, the White House said on Wednesday, according to Reuters report. 

Australia jobless rate ticked higher in February, full time jobs surged

Australia unemployment rate ticked higher to 5.6 percent in February even as the economy added 17.500 jobs, according to Australia Bureau of Statistics (ABS). 

US House, Senate leaders agree on $1.3 trillion spending bill

Livesquawk is out with the breaking news, citing that the US House and Senate leaders agree on the $1.3 trillion spending bill.

Hong Kong dollar hits fresh 33-year low of 7.8467 vs USD

The Hong Kong dollar (HKD) fell to a fresh 33-year low of 7.8467 against the greenback. 

PBOC raises 7-day reverse repo rate by 5 basis points to 2.55 percent – Reuters

The news is crossing the wires via Reuters that People’s Bank of China (PBOC) has raised the seven-day reverse repo rate by 5 basis points to 2.55 percent.

RBNZ’s Spencer: NZD is “in the vicinity” of fair value

The Reserve Bank of New Zealand (RBNZ) acting Governor Spencer is reportedly on the wires now, via Reuters, commenting on the exchange rate value in an interview before his imminent handing over to the newly appointed RBNZ Governor Adrian Orr.

Key Focus ahead

Looking ahead, we have an eventful macro calendar, with the Euro area flash manufacturing and services PMI reports dropping in from 0800 GMT onwards while the German Ifo business climate readout will be reported at 0900 GMT among other minority reports from the Euroland. At 0930 GMT, all eyes will be on the UK retail sales data, as it will hold the key for the Bank of England’s (BOE) Monetary Policy Committee (MPC) vote decision at the BOE’s on the official bank rate. The BOE monetary policy decision will be announced at 1200 GMT, which will be accompanied by its minutes and summary of the policy statement.

In the NA session, the jobless claims and flash PMI readings from Markit will be eyed amid a data-light US docket. Besides, the speech by the BOE MPC member Ramsden will also remain in focus for fresh insights on the BOE’s rate decision.

EUR/USD: Stretched too thin above 1.23 ahead of EU PMIs?

Turning to the European session ahead, a slew of Markit flash PMIs and IFO business climate indicators are waiting in the early hours, kicking off at 08:30 GMT with preliminary German Manufacturing and Services PMIs.

GBP/USD: Bullish setup, all eyes on BOE rate vote split

The Bank of England (BOE) will likely keep interest rates unchanged at 0.5 percent, however, the hawks at the central bank may feel emboldened to vote for a rate hike on the back of the Brexit transition deal and the strong UK labor and wage growth numbers.

BOE to stand pat on its monetary policy – Nomura

Analysts at Nomura offer their thoughts on today’s Bank of England (BOE) interest rate decision and minutes release, noting that they believe the BOE will make no changes to its monetary policy settings.

3 Reasons Why Dollar Crashed After Fed Hike & BoE Preview

The focus now shifts to Thursday’s Bank of England meeting. There’s talk that the BoE will raise interest rates after today’s solid wage growth report but we believe this speculation is unfounded.