The Aussie replicated the same price-action witnessed in the Asian trades a day before, as the bulls were boosted today by a beat on the Australian Q2 GDP figures. The AUD/USD pair bounced-back above the 0.72 handle on the GDP release, but quickly pared back gains and fell back below the last after the Chinese services PMI slowed further in the month of August. The Kiwi also remained depressed near 0.6550 amid oil-price weakness and negative Asian equity markets, as trade tensions and Emerging Markets (EM) turmoil continued to dampen risk appetite.
Meanwhile, the USD/JPY pair erased most gains and traded near the midpoint of the 111.50 amid a broad-based US dollar retreat, as the Treasury yields stalled their upbeat momentum. Both the EUR and the GBP traded modestly flat, awaiting fresh impetus from the Markit services PMI releases due later today.
Main topics in Asia
Barnier: UK should seek a Canada-style deal - The Telegraph
The EU's lead Brexit negotiator Michel Barnier continues his onslaught against UK Prime Minister Theresa May's belly-up Brexit proposal this week, as noted by The UK Telegraph.
US Fed's Kashkari: rates hikes are too aggressive
According to an interview with US Federal Reserve Bank of Minneapolis President Neel Kashkari, a high-powered dove within the US Federal Reserve system, the US' current pace of interest rate hikes is too aggressive and could lead to negative knock-on effects.
Australia's GDP expands 0.9% q/q in Q2, beats estimates
The Australian economy expanded 0.9 percent in the second quarter of 2018 following the first quarter's 1 percent growth, the Australian Bureau of Statistics (ABS) reported on Wednesday.
China's Caixin services PMI drops further to 51.5 in August, a big miss
China's Caixin services PMI for August came in at 51.5 vs 52.7 expected and 52.8 last, which showed that Chinese business activity growth slipped to five-month lows in August.
Mexico’s EcoMin Guajardo: Hope there is Nafta deal between US, Canada by Friday
Mexican Economy Minister Ildefonso Guajardo was on the wires last minutes, via Reuters, noting that he hopes will be a deal between the US and Canada in North Atlantic Free Trade Agreement (NAFTA) talks by Friday.
Sources: Saudi Arabia is seeking to keep oil prices at $70-$80 a barrel - Reuters
Reuters quoted three OPEC and industry sources, as saying that Saudi Arabia, the OPEC’s No.1 oil producer, is seeking to keep oil prices at $70-$80 a barrel.
Sources: BoJ is said to see recent tweaks working well - Bloomberg
Bloomberg cites people familiar with the discussion at the Bank of Japan (BoJ), noting the following headlines …
Key Focus ahead
Calendar-wise, Europe remains quite busy today, with Markit final services PMI from the Euro area economies to start trickling in from 0715 GMT. The main market mover for the EU session is expected to be the UK services PMI release due at 0830 GMT, which is expected to rise to 53.9 in August versus 53.5 seen previously. Also, in focus remains the Eurozone retail sales data that will be reported at 0900 GMT, followed by the ECB Chief Economist Peter Praet’s speech scheduled at 0930 GMT.
In the NA session, the Canadian trade balance will grab some attention amid looming NAFTA talks between the US and Canada. However, the main event risk for traders remains the Bank of Canada (BOC) rate decision due to be announced at 1400 GMT. In the American afternoon, we have a slew of Fedspeaks, with the FOMC members Williams and Kashkari due to speak at 1900 GMT and 2000 GMT respectively. The API weekly crude stockpiles report will be published at 2030 GMT.
EUR/USD: Bulls defend key support, focus on treasury yields
The EUR defended a key falling trendline support on Tuesday, boosting odds a bullish reversal. However, bull reversal would be confirmed only if the pair closes today above the previous day’s high of 1.1620.
GBP/USD holding steady above 1.2850 ahead of UK PMI
It's Markit Services PMI day across the European continent, and the UK's latest round of services indicator is due at 08:30 GMT and markets are looking for a mild uptick in the reading …
How to trade the UK Services PMI with GBP/USD
Markit's Services PMI is a critical forward-looking indicator for the economy and moves the pound. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
Gold: Greenback remains the focal point
The metal's biggest nemesis - the US dollar - picked up a bid yesterday, possibly due to a rise in the 10-year treasury yield to a three-week high of 2.90 percent.
The Bank of Canada is expected to stand pad on the target policy interest rate at the beginning of September after the Bank of Canada hiked the policy rate by 25 basis points back in July bringing the rate to 1.50%.
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