Forex Today: Antipodeans cheer trade deal optimism; GBP slips ahead of key UK data

The market mood in Monday’s Asian trading was buoyed by the renewed optimism over the US-China trade deal signing, especially after the US Treasury Secretary Mnuchin said that China’s trade commitment with the US was unchanged in the translation.

The higher-yielding Antipodeans benefited the most, with the Kiwi outperforming across the fx space, having risen over 0.30%. The Aussie jumped to four-day highs at 0.6920 amid mixed Australian inflation figures and upbeat S&P report on the country’s sovereign credit rating. The anti-risk yen was on the back foot amid Japanese holiday-thinned trades and a better risk environment, as the Asian equities clocked fresh 19-month highs. Therefore, USD/JPY advanced in a bid to challenge the key 109.70 resistance. Markets shrugged off the latest Iranian rockets attack news that injured a few Iraqi servicemen at the airbases that housed the US troops in Iraq.

The pound was the biggest loser in Asia, in the face of increasing calls for a Bank of England (BOE) rate cut by the bank’s policymakers and ahead of key UK economic releases. GBP/USD lost 0.25% and traded around 1.3025 region. Meanwhile, EUR/USD kept the bid tone intact around 1.1130 levels amid weak US NFP data-led broad US dollar weakness.        

Among other related markets, oil prices steadied near multi-week troughs, with WTI around $59 handle. Gold prices posted small losses below $1555 despite negative Treasury yields, as the risk-on tone curbed the demand for the safe-haven.

Main Topics in Asia

Rocket attack in Iraq base hosting US troops

US Treasury Secretary Mnuchin: There will be a phase two of China trade talks - Fox

PBOC Dep. Governor Yifei: China must promote pension investment to bolster capital market

European Union would not be rushed in negotiations with Britain - BBC

Robert O'Brien: Trump administration has “reached out to the North Koreans” – Axios

Australia's AAA rating not at risk from bushfires: S&P - Reuters

USD/IDR drops to fresh 23-month low amid USD weakness, headlines from Natuna

US Pres. Trump to Iran: No nuclear weapons and “don’t kill your protesters”

USD/THB: Taiwan dollar gains ground on President Tsai's election victory

Terms of US-China phase one trade deal will be balanced and legally binding on both sides – Global Times

China’s NDRC Vice Chairman Ning: China’s economic growth in 2019 met target

UK financial firms' sentiment improves for first time in four years - Survey

Bundesbank Official: Eurozone GDP growth expected at 1.1% in 2020

Key Focus Ahead       

Markets brace for a busy start to a big week ahead, as the US-China phase one trade deal signing will remain in the spotlight amidst critical economic release from the US as well as from China.

Today’s EUR macro calendar sees the release of the second-liner   Wholesale Price Index (WPI) data for December, due at 0700 GMT. Next of note remains the UK data dump dropping in at 0930 GMT. The UK data includes the monthly GDP growth figures, trade balance, industrial and manufacturing production data. The data will be closely watched after several Bank of England (BOE) policymakers recently noted that the central bank is open to rate cuts as the next policy move.

Looking ahead, the US docket is data empty and hence, traders will keep an eye on the Bank of Canada (BOC) Business Outlook Survey and New Zealand’s NZEIR Q4 Business Confidence data for some fresh trading cues in the NA session.

Meanwhile, fresh UK political developments and updates on the US-China trade front will continue to offer some momentum to the markets.

EUR/USD: Dollar under pressure due to weak US jobs data

EUR/USD challenges the former support-turned-resistance line at 1.1132. Friday's dismal US data is likely powering gains and may continue to drive the pair higher in Europe. The euro could also draw bids on US-China trade optimism.

GBP/USD under pressure below 1.3050 ahead of UK data dump

GBP/USD trades weaker around 1.3040 ahead of key UK macro releases. The pair highlights the dovish tone from the BOE and the EU-Irish pessimism surrounding the Brexit while ignoring British forms’ positive outlook and USD weakness. 

Forex Weekly Outlook – US consumer in focus after the Mid-East flare-up

As the dust settles from the Non-Farm Payrolls, the focus shifts to consumer data, while the Chinese GDP report is also of high interest. Here the highlights for the upcoming week.

Week ahead – It’s a trade deal!

As far as the coming week goes, politics will continue to dominate but there are some interesting central bank meetings, as well as a few interesting economic releases that will certainly draw attention.