A typical pre-Fed caution trading was experienced across the fx board in Asia this Wednesday. The US dollar resumed its bearish momentum amid increased expectations of a dovish Fed rate hike, offering a fresh boost to most majors. Although, the upside remained capped amid negative Asian equities and Treasury yields.
Among the Asia-pac currencies, the Kiwi emerged the strongest, followed by the Aussie, as the commodity-currencies benefited from a bounce in oil and copper prices. The USD/JPY pair witnessed good two-way price movements, but the JPY bulls retained control, now targeting the 200-DMA at 111.60 on the Fed verdict. The traditional safe-haven, gold, traded near the 1255 levels, underpinned by the Fed slowdown ahead.
Main Topics in Asia
US Treasury Sec. Mnuchin: Expect January trade talks with China - Bloomberg
NZ: Current account shaves down GDP forecasts - TDS
PwC: UK economy to slip to seventh globally on Brexit - Reuters
Japanese exports plummet on trade fears, global slowdown - Reuters
Trump issues US Federal Government shut down on December, 24th
WTI Technical Analysis: New 17-month lows and accelerating bearish lean into $46.00
Gold nears 200-day MA for the first time since June 14
UK government to implement plans for a no-deal Brexit in full - Reuters
Asian business confidence near 3-year low on trade worries - Thomson Reuters/INSEAD survey
Key Focus Ahead
Today’s macro calendar sees plenty of event risks, with the main highlight likely to be the Fed rate hike decision, although with a dovish tilt. In the face of growing global growth concerns and trade war risks, markets are widely expected to slow down on its tightening path, with only a Fed rate hike expected now for the next year.
Ahead of the Fed outcome, traders await the UK CPI figures, due at 0930 GMT, for fresh trading impetus in the European session, as no relevant macro news are on the cards from the Euroland.
In the NA session, the Canadian CPI report at 1330 GMT will be closely eyed alongside the release of the US current account data. At 1400 GMT, the SNB quarterly bulletin will be released, followed by the US existing home sales and EIA crude stocks data dropping in at 1500 GMT and 1530 GMT respectively. The key Fed rate decision will be announced at 1900 GMT accompanied by the Statement of Economic Projections (SEP) while the Fed Chair Powell’s presser is scheduled at 1930 GMT.
EUR/USD: Bulls need a break above 55-day EMA, focus on Fed
Risks surrounding the EUR/USD pair are skewed to the downside, markets seem to have run ahead of themselves while pricing in the Fed's potential dovish turn.
GBP/USD rising slowly towards 1.2700, but Brexit remains a roadblock
Sterling's lift faces plenty of resistance in the near-term, with major technical levels and Brexit headlines both weighing on the GBP.
Federal Reserve Preview: Slowdown ahead
The Federal Open Market Committee (FOMC) is widely forecast to raise the Fed Funds rate 25 basis points to 2.5% after its scheduled two-day meeting on Wednesday, December 19th.
Australian jobs report preview: A healthy labor market may not be enough for AUD/USD
Australia publishes its jobs report for November on Thursday, 00:30 GMT. The Land Down Under enjoyed a robust rate of jobs growth in October: no less then 32.8K positions were added to the economy …
BOJ decision preview: Putting dovishness in perspective
The Bank of Japan will announce its last rate decision of 2018 on Thursday, December 20th, late in the Asian session. Governor Haruhiko Kuroda will hold a press conference early in the European session.
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