Forex Today: Aussie regains 0.72 on RBA’s status-quo, focus on UK PMI, BOE inflation report hearings

Forex today witnessed notable US dollar demand in Asia this Tuesday, as Emerging Markets (EM) worries and trade war fears underpinned the safe-haven appeal of the buck. Hence, we could see a fresh selling wave across most majors The Yen lost ground, having pushed the USD/JPY pair back above the 111 handle after BoJ’s routine QQE adjustment was not seen as a hawkish tweak.  The EUR, Kiwi and the pound were also better offered amid mixed tone on the Asian indices and subdued oil prices, as we progress towards the European opening bells.

However, the Aussie staged a solid rebound and regained the 0.72 handle following the Reserve Bank of Australia’s (RBA) status-quo on its monetary policy stance. Meanwhile, widening Australian trade deficit could keep the recovery in check.

Main topics in Asia

Critics attack PM May from both sides - Reuters

According to reporting by Reuters, UK Prime Minister Theresa May continues to face friction from both sides amidst current Brexit positioning, with both the EU and her own Conservative party giving the UK PM a run for the money.

Hard Brexit scenario odds at 25% - Reuters Poll

According to the results of a Reuters poll, odds are roughly 1-in-4 of a hard-style exit from the EU for the United Kingdom.

BOJ boosts purchases of bonds maturing in 1-3 years and 3-5 years

The Bank of Japan (BOJ) has increased purchases of the Japanese government bonds (JGBs) maturing in 1 years to 5 years. 

Australia net exports to add 0.1% to Q2 GDP

Australia net exports could add 0.1 percent to its second-quarter gross domestic product (GDP), showed the balance of payments data for the June quarter, released by the Australian Bureau of Statistics on Tuesday.

Nikkei Review: Japan plans to go ahead with tax hikes - Reuters

As reported by Reuters, the Nikkei Review news service quoted Japanese Prime Minister Shinzo Abe regarding the government's plans to start pushing taxes higher despite potential risks.

Reserve Bank of Australia keeps cash rate on-hold at 1.50%

The Reserve Bank of Australia (RBA) at its September monetary policy meeting held today, left the official cash rate (OCR) unchanged at a record low of 1.50 percent for the twenty-third straight meeting.

Key Focus ahead

Today’s EUR macro calendar see a plenty of events, starting off with the Swiss CPI at 0715 GMT, followed by the UK construction PMI for August due at 0830 GMT. The construction sector activity in the UK is seen deteriorating to 54.9 in August versus 55.8 booked in July. Also, the Eurozone producer price index (PPI) data will drop in at 0900 GMT. Apart from the data, the speech by the RBA Governor Lowe will be closely heard at 0930 GMT. However, the key event for EUR, GBP traders is likely to be the Bank of England (BOE) inflation report hearings scheduled at 1215 GMT.     

In the NA session, we will see full markets returning after Monday’s Labour Day holiday, with the focus on the Canadian Markit manufacturing PMI and ISM manufacturing PMI report from the US among other minority reports. New Zealand will also Fonterra’s fortnightly dairy auction results around 1400 GMT while the FOMC member Evans’ speech will be released at 1430 GMT.

EUR/USD: Descending broadening wedge on 4H, focus on yield differentials

The EUR/USD pair has charted a descending broadening wedge on the 4-hour chart, which is widely considered a bullish reversal pattern. An upside break could be seen today if the spread between the 10-year Italian bond yield and the German bond yields drops sharply.

GBP/USD struggling to find a foothold ahead of the BoE inflation report hearing

Tuesday brings the UK's latest Construction PMI for the year into August at 08:30 GMT, forecast to dip from 55.8 to 54.9, while the big news of the day will be the UK's Inflation Report Hearings, due at 12:15 GMT.

ISM manufacturing PMI Preview: Expected slowdown in manufacturing activity and prices paid unalters Fed’s take on rates

The ISM manufacturing PMI is expected to slow down with the economic activity continuously rising for the 112th month in a row.

How to trade the US ISM Manufacturing PMI with EUR/USD

The ISM Manufacturing PMI is a hint towards the jobs report and impacts currencies. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.