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Fundamental Forex Analysis

Aussie outperforms amid pre-NFP quiet trading, trade deal progress

Amid a typical pre-US Non-Farm Payrolls (NFP) lull, most major traded in thin trading ranges, except for the Australian dollar. The Aussie outperformed the fx board and bounced-back towards 0.6900, as the risk-on sentiment extended into Asia amid fading US-Iran war risks and US-China trade deal optimism. The above-estimates Australian Retail Sales data also added to the upside in the domestic currency.

US President Trump confirmed that the phase one trade deal will be signed on January 15th or the agreement could be signed shortly after. The US dollar index showed little reaction to Trump’s comments and consolidated the previous gains to multi-day tops. Meanwhile, EUR/USD hovered above the 1.11 level, the cable recovered some ground after the UK PM Johnson’s Brexit bill was cleared by the UK House of Commons.

The anti-risk yen stood resilient despite a better market mood, keeping USD/JPY sidelined around 109.50 region. The alleged reports that the Iranian missiles shot down the Ukrainian plane kept the market slightly cautious while pre-NFP nervousness also weighed. Therefore, the Asian markets traded mixed while Treasury yields held onto minor gains.

On commodities’ front, oil prices remained under pressure near four-week lows while gold prices also traded on the back foot below $1550.

Main Topics in Asia

UK’s Raab: Iranian missile shot down the plane

Iranian official: US NTSB has accepted invitation to participate in Ukrainian jet investigation

House passes resolution to limit Trump’s war powers against Iran – Reuters

Reports of conflict on the border between Iraq and Syria

Aussie Retail Sales (Nov MoM): +0.9 vs +0.4 expected (AUD bullish)

Bundesbank’s Buch: ECB must keep monetary policy easy for inflation to pick up

China’s expert: A US-China phase two trade deal after November is too far away – Global Times

BI Survey: Indonesia’s Retail Sales rise 1.3% YoY in Nov, Rupiah at 21-month highs

USD/INR: Rupee likely to remain under pressure in 2020 – Reuters poll

EIA: India’s oil demand growth set to overtake China by mid-2020s

US Pres. Trump: US-China trade deal will be signed on Jan 15, but agreement shortly thereafter

Key Focus Ahead       

Markets gear up for the all-important US Non-Farm Payrolls data due later in the NA session at 1330 GMT that will set the direction for the greenback in the coming weeks.

Ahead of the US jobs data, there are no significant economic releases from the European calendar, except for the Swiss Unemployment Rate due to be reported at 0645 GMT. The UK politics-related headlines surrounding Brexit combined with any developments on the US-China trade deal and Mid-East crisis should offer some incentives to the traders.

Also, in focus remains the Canadian Employment data lined up for release alongside the US labor market report. Meanwhile, oil markets will watch out for the Baker Hughes US Oil Rig Count dropping in at 1800 GMT.

EUR/USD: Traders await crucial US NFP release

The EUR/USD market appears to have turned indecisive ahead of the US Nonfarm Payrolls report for December. The currency pair charted a Doji candle Thursday. An above-forecast US data could yield a bearish daily close. 

GBP/USD consolidates losses amid pre-NFP lull

GBP/USD in on a road to recovery but remains below the 1.31 handle ahead of the London open on Friday. Traders will keep an eye on political news for immediate direction ahead of the US employment data.

Will 2020’s First NFP Report Help the Dollar?

While geopolitics remain front and center for a few hours on Friday, it will take a backseat to data. Labor market numbers are due for release from the US and Canada. 

Nonfarm Payrolls Preview: New year, old data

US economy expected to have added 164K new jobs in December. Political headlines will probably continue to overshadow fundamental figures.


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