Forex today in Asia was mainly driven by risk-off trades, with the Asian indices tracking their Wall Street counterparts lower, while worse-than expected Australia’s trade figures combined with downbeat China’s services PMI report curb appetite for risk assets further. As a result, the Antipodeans were the worst hit, with the Aussie facing a double whammy, particularly in the wake of broad based USD recovery.
Main topics in Asia
Australia's June trade balance disappoints, drop in exports weigh
Australia's June trade balance came at AUD 856 million vs AUD 1.8 billion expected and 2.471 billion prior, with exports coming at -1% vs 9% prior, while imports saw a 2% increase vs 1% prior.
China’s Caixin Services PMI eases in July, misses expectations
China’s Caixin May Services PMI came in at 51.5 in July vs 51.6 last and 51.9 expectations.
S&P: More risk to Australia sovereign rating than in past
Bloomberg out with the latest headline on Australia’s credit rating, citing that there is more risk to Australia’s sovereign rating now than in past.
Japan’s Aso: Will continue to focus on economic revival and fiscal reform
Japanese Finance Minister Taro Aso is out on the wires now, via Reuters, commenting on the economy and inflation prospects.
Key Focus ahead
Looking ahead, the European session kicks-off with the release of a series of final services PMI from across the Euro area economies, followed by the UK services PMI data. However, the main risk event for today remains the BOE ‘Super Thursday’, with the BOE policy decision to be announced accompanied by the quarterly inflation report and meeting minutes. In the NA session, the US jobless claims, ISM non-manufacturing PMI and factory orders will keep the US traders busy.
GBP/USD: BOE to disappoint the hawks, 1.3100 on the cards?
Having faced rejection once again at 1.3250 levels, the GBP/USD pair moved-away from multi-month tops in Asia, as investors turn cautious heading the BOE’s ‘Super Thursday’.
BOE to maintain optionality on a rate rise should momentum improve in H2 – Goldman Sachs
Analysts at Goldman Sachs offer their insights on BOE’s Super Thursday, with the policy decision and Quarterly Inflation Report (QIR) due to be released at 1100GMT today.
GBP Outlook - Will the Bank of England Disappoint?
Sterling is trading near a 2 year high ahead of the Bank of England's monetary policy announcement and this strength along with the rise in U.K. yields tell us that investors are bracing for hawkishness from the central bank.
EUR/USD - First attempt at monthly 50-MA failed, risk reversals flat lined
The EUR/USD pair rose to a high of 1.1910 yesterday before falling back below the monthly 50-MA level of 1.1870. The monthly 50-MA was put to test on Wednesday for the first time after August 2014.