Forex - Asia Highlights - Wednesday, 22 May 2019


 04:00 (GMT) 22 May

  [Forex Highlights]

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US Overview:

Positive equities lifted USD/JPY significantly and UST yields modestly. GBP saw a brief spike on second referendum headlines with PM May offering one should her withdrawal bill pass, but the move proved brief.

US Highlights:

- US Apr existing home sales -0.4% to 5.19m vs 5.35m exp.

- Fed's Rosengren said he expects inflation to return to 2% over time.

- Fed's Evans said need to follow through if say will go over 2% inflation.

FX Highlights

The Bloomberg dollar spot index traded higher on Tuesday to 3-week highs of 98.134 after the U.S. eased restrictions on Chinese tech giant Huawei. A fade in optimism surrounding U.K. Prime Minister Theresa May's offer for a second Brexit referendum and weakness in Antipodean currencies also supported a stronger dollar.

GBP/USD hit its lowest level since January at 1.2685 in early European hours, the weakness a combination of GBP weakness and USD strength, with EUR/GBP also hitting its highest level since February. A modest recovery followed in the European morning, and then a sharp bounce to trade briefly above 1.28 just before PM May's speech on reports that she had suggested including a second referendum and a Customs Union in the Withdrawal Agreement Bill. While she did offer the prospect of a second referendum this was dependent on the bill being passed by parliament, and with this looking increasingly unlikely, the bounce was erased.

AUD/USD remained below .69 following the dovish remarks from the Governor on Tuesday pointing to a June rate cut. NZD/USD was also dragged lower to near 7-month lows of 0.6501 as Q1 retail sales is eyed on Wednesday.

USD/JPY strengthened above 110.60, probably reflecting some improvement in risk sentiment though the rise exceeded usual correlations with equity market moves.

EUR/USD was dragged up to 1.1187 by the brief GBP/USD bounce but retuned to near neutral in the NY session. USD/CAD found buyers below 1.34 but was back near the figure in late trade.

Data:

NZ: Retail Sales Ex Inflation (Q1) 0.7% q/q (Mkt: 0.6 Prev: 1.7)

JP: Core Machine Orders (Mar) 3.8% m/m (Mkt: 0.0 Prev: 1.8)

JP: Core Machine Orders (Mar) -0.7% y/y (Mkt: -3.4 Prev: -5.5)

JP: Trade Balance (nsa) (Apr) 60.4 JPY bn (Mkt: 232.7 Prev: 527.8R)

JP: Trade Balance (sa) (Apr) -110.9 JPY bn (Mkt: -37.5 Prev: -154.3R)

AU: Westpac Leading Index (Apr) -0.09% m/m (Prev: 0.28)

AU: Construction Work Done (Q1)-1.9 % q/q (Mkt: 0.0 Prev: -2.1R)

Still to Be Released -

Data:

08:30 GMT - UK: CPI (Apr) 4cast: 0.7% m/m (Mkt: 0.7 Prev: 0.2)

08:30 GMT - UK: CPI (Apr) 4cast: 2.3% y/y (Mkt: 2.2 Prev: 1.9)

08:30 GMT - UK: Input Prices (nsa) (Apr) % m/m (Mkt: 1.3 Prev: -0.2)

08:30 GMT - UK: Input Prices (nsa) (Apr) % y/y (Mkt: 4.2 Prev: 3.7)

08:30 GMT - UK: Output Prices (unadj.) (Apr) % y/y (Mkt: 2.3 Prev: 2.4)

08:30 GMT - UK: Output Prices Core (unadj.) (Apr) % m/m (Mkt: 0.2 Prev: 0)

08:30 GMT - UK: Public Borrowing (PSNB ex banks) (Apr) GBP bn (Mkt: 5.9 Prev: 1.7)

08:30 GMT - UK: Public Finances (PSNCR) (Apr) GBP bn (Mkt: Prev: 8.9)

12:30 GMT - CA: Retail Sales (Mar) 4cast: 0.5% m/m (Mkt: 1 Prev: 0.8)

12:30 GMT - CA: Retail Sales (ex Auto) (Mar) 4cast: 0.5% m/m (Mkt: 0.9 Prev: 0.6)

Events & Auctions:

01:30 GMT - JP: Bank of Japan's Harada speaks in Tokyo

03:35 GMT - JP: 20yr Bonds Auction

07:00 GMT - EU: ECB's Draghi speaks in Frankfurt

07:30 GMT - SE: Riksbank to publish financial stability report

08:00 GMT - SE: Riksbank press conference in Stockholm

08:30 GMT - EU: ECB's Visco Speaks in Rome

09:30 GMT - EU: ECB's Praet speaks in Frankfurt

09:30 GMT - DE: Tap of Bund 0.25 2/15/29 (EUR 3bn)

14:10 GMT - US: Fed's Bostic speaks in Dallas

18:00 GMT - US: FOMC minutes


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