Forex today witnessed broad-based US dollar strength in Tuesday’s Asian trading, mainly driven by moderate risk-aversion on fading US-China trade optimism as China slowdown worries resurfaced following softer Chinese GDP target and dismal services PMI.
Most majors traded in the red zone, with EUR/USD grinding lower against the backdrop of rising scepticism over the possibility of a US-China trade deal in the next weeks, while risk-appetite trends also appear somewhat subdued. Meanwhile, rising bets of a hard Brexit ahead of the Parliamentary approval of the EU-UK deal next week added to the negative bias in the Pound. The Yen also remained on the back foot, as the USD/JPY pair continued it struggle to regain the 112.00 handle.
Tuesday’s EUR macro calendar is a busy one, with the February services PMI reports from across the Euro area economies and the UK. Also, in the session ahead while the Eurozone retail sales and Italy’s Q4 final GDP data will be also closely followed. Among the services PMI readings, the one from Germany and entire bloc will have a major impact on the EUR trades. Moving on, the NA session sees the releases of the services PMI from both Markit and ISM due later at 14:45 GMT and 15:00 GMT respectively. Ahead of the PMIs, the US building permits will drop in at 12:30 GMT. The main highlight remains the BOE Governor Mark Carney’s testimony due at 15:35 GMT on Brexit, inflation, and the economy before the House of Lords Economic Affairs Committee, in London.
WTI trades little changed near $56.40 during the early European session on Tuesday. The energy benchmark increased Monday on positive sentiments favouring an end to the US-China trade spat and supply-cut concerns from OPEC+ alliance. However, prices struggled to carry the gains overnight after investors started doubting the peace accord between the world’s two largest economies while developments from China’s annual parliamentary event were also grim.
Gold failed to capitalize on the overnight attempted rebound, led by a sharp fall in the US equity markets and remained under some selling pressure for the fifth consecutive session on Tuesday. Persistent US Dollar buying interest, supported by the recent upsurge in the US Treasury bond yields, was one of the key factors driving flows away from the dollar-denominated/non-yielding yellow metal.