Forex today cheered the risk-on market environment fuelled by the Trump’s comments on trade and Fed policy that boosted the odds of a trade deal between the US and China.
Among the Asia-pac currencies, the Aussie jumped to 0.7230 on improved trade sentiment but lacked further upside momentum and consolidated ahead of the 0.72 handle amid ongoing broad-based US dollar strength. The Kiwi also traded firmer just below the 0.6900 level, as higher oil prices and the rally in the Asian equities boosted the higher-yielding currency. The USD/JPY pair hit a fresh 6-day highs at 113.52 and consolidated the gains near the last almost throughout the Asian trading.
The gains in the Asian stock markets were led by the Japanese benchmark, the Nikkei 225 index, which rose over 2% to trade near 21,600 levels. Meanwhile, gold prices on Comex traded modestly flat around the 1250 barrier heading into the critical US inflation report.
Key Focus Ahead
A thin showing on the macro data front extends into the European session, with nothing of note until the release of the Eurozone industrial production data at 1000 GMT. Also, the major central banks” speakers have switched to the sidelines ahead of the ECB policy decision tomorrow and next week’s Fed verdict.
In the NA session, the key US CPI report for November will be released at 1330 GMT that is likely to arrive at 2.2% vs. 2.5% previous while the core figures are seen a tad firmer at 2.2% vs. 2.1% last. At the same time, the Canadian third-tier capacity utilization data will be reported.
The main event risk for today is likely to be the meeting between the EU”s Juncker and the Italian PM Conte due at 1500 GMT, as both the leaders are likely to discuss the Italian budget. Further, the official US government crude stockpiles data will be published at 1530 GMT, followed by the US monthly budget statement at 1900 GMT.
The EUR/USD pair may defend the support of the trendline connecting the Nov. 13 and Nov. 28 lows for the second day on the back of risk-on action in the equities.
Wednesday will be clean of UK economic data, and Thursday will be likewise empty, with only RICS Housing Prices on the docket early Thursday at 00:01 GMT, well before the London markets open.
Annual core inflation which excludes food and energy prices is predicted to increase to 2.2% in November from 2.1%. On the month no change is expected from the October gain of 0.2%.
In the view of the analysts at HSBC bank offer a sneak peek at what to expect from the Swiss National Bank (SNB) monetary policy decision due later this week.