Forex Today: Antipodeans hurt by China data, Risk-on to extend?

The risk-on sentiment was the underlying theme in Asia today, lifting the demand for the higher-yielding/ risk assets at the expense of the safe-havens such as the Yen and gold. A relief rally in the Asian equities, oil and copper prices brought risk-on trade back into markets, as the looming concerns over a US-China trade war receded. The US dollar rebounded against the Yen for the first time in three days and tested the 105.75 figure.

However, the Antipodeans failed to benefit from better risk environment, as the slowdown in China’s industrial profits combined with broad-based US dollar recovery weighed negatively. Meanwhile, both the EUR and GBP held near multi-week tops versus the greenback, as the bulls geared up for a fresh leg higher in the upcoming session.

Main topics in Asia

White House's Navarro says the US in talks with China on trade

In an interview with CNBC, White House trade adviser Navarro said Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer are negotiating with Chinese counterparts to resolve outstanding trade differences. 

North Korea leader Kim Jong Un visits China: Bloomberg

North Korea leader Kim Jong Un visited China on Monday, according to Bloomberg, although details of his visit (purpose and Itinerary) are not known. 

Japan's Sagawa on document alteration scandal

Nobuhisa Sagawa, the former head of Japan's National Tax Agency who stepped down amidst the government land sale scandal is giving his sworn testimony in the Japanese Diet today.

Mexico, US sign customs and border accords - Reuters

Mexico and the United States have signed accords outlining improvement to bilateral agreements and customs procedures.    

China's industrial profits rise 16.1 percent y/y in first two months of 2018

China’s National Bureau of Statistics (NBS) published its industrial profits data for the first two months of this year, showing a 16.1 percent rise in the reported period when compared to the same period in 2017.

Key Focus ahead

A data-light EUR calendar extends into a second day this Tuesday, with no first-tier macro data slated for release, the second-liner releases in the Spanish flash CPI y/y and Eurozone money supply, followed by a string of Eurozone economic sentiment and confidence numbers may keep the EUR. GBP traders busy. Also, the Bank of England’s (BOE) Financial Policy Committee (FPC) meeting minutes is due to be published at 0830 GMT.

Later in the NA session, the US CB consumer confidence data will hog the limelight amidst the releases of other minority reports viz., S&P/CS Composite-20 HPI y/y and Richmond Manufacturing Index. Besides, the FOMC member Bostic is scheduled to speak at the Hope Global Forums Annual Meeting, in Atlanta.

Meanwhile, the developments around the US-China trade issue will continue to influence the risk trends, which is likely to remain the exclusive driver across the fx board.

EUR/USD: Bulls emboldened as trade war fears abate, bull bias strengthens

The spot looks ready to revisit the Feb. 16 high of 1.2556 and may possibly break higher towards 1.26 if the risk assets remain bid and the Eurozone sentiment/business confidence numbers due at 09:00 GMT better estimates. 

GBP/USD heading for January highs above 1.43

The macro calendar is a light showing for the Sterling in Tuesday's market session, however, the Financial Policy Committee will be dropping their FPC Statement at 08:30 GMT.

Euro Hits 5 Week Highs, 1.25 Next?

EUR/USD finally broke out of a long consolidation and is eyeing 1.25. We think it will get there even if tomorrow's Eurozone confidence numbers fall short of expectations.

GBP: What’s next? - ANZ

In the view of the analysts at ANZ, a limited upside potential is seen in the pound, with GBP/USD to likely peak ahead of the 1.45 handle.

Gold to outperform in coming months – Goldman Sachs

In the latest client note, Goldman Sachs’ analysts offered their outlook on gold prices in the coming months.