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Forex Today: Yen slips as China stimulus boosts risk; Draghi speech, Brexit vote - key

FXstreet.com Tuesday, 15 January 2019
A major turnaround in the risk sentiment was witnessed in Tuesday’s Asian trading after the confidence across the financial markets was bolstered by the Chinese stimulus measures to spur growth. The PBOC cut the RRR rate while the Finance Ministry unveiled fresh fiscal measures. The Asian markets jumped into the green zone while oil and copper prices rallied on the stimulus talks. WTI rose nearly 1.50% to reclaim the 51 handle while copper futures on Comex gained 0.80% to 2.650 levels.

Across the fx space, the proxies for China, the Antipodeans caught a fresh bid-wave, tracking the advances on the Asian indices. The Aussie headed back towards the monthly tops, posting daily tops at 0.7222 while the Kiwi rallied to test the 0.6850 barrier. The safe-haven Yen emerged the biggest loser amid a typical risk-on market profile that sent the USD/JPY pair to 108.75 highs, up +0.50% on the day. Meanwhile, the pound remained on the offensive and regained the 1.29 handle heading into the crucial Brexit vote later on Tuesday. The EUR/USD pair traded modestly flat, having faced stiff resistance just shy of the 1.15 handle.

*Main Topics in Asia*

Gold Technical Analysis: Trapped in a contracting triangle

OPEC to publish quotas for new output cut deal - TASS

Source: US President Trump sent letter to N. Korean Leader Kim over the weekend - CNN

*China’s Stimulus Efforts *

China NDRC: Will strengthen counter-cyclical adjustments in its macroeconomic policy

PBOC cut RRR rate, plans to monetary policy more forward-looking, flexible and targeted

China’s Finance Ministry: Will boost the fiscal expenditure in 2019

Asian stocks catching bids, confidence bolstered by China RRR cuts

China NDRC Vice Chairman rules out stimulus flood

PBOC's Zhu: To offer enough support to the economy

China will cut taxes on a "large scale" to shore up the sagging economy - Bloomberg

PBOC's Zhu: Yuan can be kept stable despite cuts in RRR

Asian stocks catching bids, confidence bolstered by China RRR cuts

*Key Focus Ahead*

Markets buckle up for a volatile session ahead, as the UK Parliamentary vote on the PM Theresa May’s Brexit deal is likely to remain the key focal point. It’s widely expected that PM May’s will face a defeat before the lawmakers. However, the margin of the defeat will emerge the key market driver, as it will determine the next course of action for May’s government. The voting outcome is likely to drop in between 1900 GMT – 2100 GMT.

The Brexit vote excitement is likely to overshadow all the macro releases due on the cards in the day ahead. The Eurozone trade balance is due at 10000 GMT while the US docket will remain data empty amid the US shutdown. New Zealand will report its fortnightly dairy auction results around 1400 GMT that will be followed by the ECB President Draghi’s speech at 1500 GMT. Also, in focus will remain the FOMC member George’s speech due at 1800GMT. Oil traders will eagerly await the API fuel stocks data due to be published at 2130 GMT.

EUR/USD: Focus on Brexit vote and EUR/GBP flows

The EUR/USD volatility could rise, as the Brexit vote is expected to yield big moves in the *EUR/GBP* cross. The market already expects the motion to be rejected by a historically big margin.

GBP/USD trimming into 1.2900 as markets brace for Brexit vote

*GBP/USD* is trading just shy of the 1.2900 major level heading into Tuesday's Brexit bombshell showdown between Prime Minister Theresa May and the UK's House of Commons.

All eyes on London: Handicapping the Brexit vote on Sterling

The vote on Prime Minister May's Brexit deal will dominate global markets on Tuesday. 

GBP - How to Trade the Brexit Vote

For the next 48 hours, there's nothing more important than the Brexit vote. Members of Parliament will begin voting on Prime Minister May's withdrawal agreement at 7pm London time on Tuesday. 

Source: US Pompeo to hold talks with North Korea this week - Chosun Ilbo

the Chosun Ilbo, quoted an unnamed diplomatic source familiar with the talks between the United States and North Korea, citing that the US Secretary of State Mike Pompeo …

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News video: China stimulus boosts European shares, autos rally but Italian banks wilt

China stimulus boosts European shares, autos rally but Italian banks wilt 01:49

China's new stimulus hopes brought relief after Monday's share markets wobble. Autos hit a 6-week high and the PSA Group reported record sales, 'though, as David Pollard reports, Italian banks suffered badly and a key UK parliamentary vote on Brexit had the potential to bring more pain.

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