Forex Today: Aussie dumped on RBA's neutral shift, focus on Brexit, US data

The Aussie emerged the biggest loser across the fx board in Asia this Wednesday, as the Reserve Bank of Australia (RBA) Governor Lowe’s switch to the neutral rate outlook boosted the doves. The currency jawboning by Lowe exacerbated the pain in the domestic currency, knocking-off the AUD/USD pair almost 1 big figure to the 0.7150 level. The Kiwi came under pressure, tracking the heavy sell-off in the OZ peer and headed to 0.6850, down -0.40% on the day. Meanwhile, the Yen recovered ground after Trump’s SOTU address raised the US-China trade issue and soured the risk sentiment somewhat. The USD/JPY pair, therefore, dropped sharply to 109.65 levels, having faced rejection once again at the 110 handle. The Cable attempted a brief recovery stint after yesterday’s slump, as the bulls were rescued by the delayed Brexit hopes. The common currency briefly dipped below the 1.14 handle, as the greenback retreated from the higher levels across its main competitors.

Among the related markets, the Asian stock markets traded with modest gains alongside oil prices, as markets remain wary amid fresh US-China trade talks. Gold prices on Comex traded in a tight range below the 1320 levels, despite subdued Treasury yields.

Main Topics in Asia

US Treasury Sec. Mnuchin hopes Democrats back the trade efforts with China

UK ministers studying high-tech plan to keep the Irish border open – The Sun

WTI consolidates the drop to $ 53.50 amid bearish API report

UK Cabinet ministers hold secret discussions on plans to delay Brexit by 8 weeks – The Telegraph

Fed's Kaplan: Yield curve sending cautionary signals

Gold Technical Analysis: trapped in an expanding falling channel in the hourly chart

RBA Neutral Switch

RBA's Lowe: Interest rate outlook is more evenly balanced

RBA's Lowe: Lower rates would lead to a lower AUD

Trump’s SOTU

Trump: Only thing that can stop strong US economy is 'foolish war, politics, or ridiculous partisan investigations'

Trump: New trade deal with China must include end unfair trade practices, reduce our chronic trade deficit

Trump SOTU: Accelerated negotiations for political settlement in Afghanistan

Key Focus Ahead

The EUR calendar for today kicks-off with the much-awaited German factory orders data at 0700 GMT, especially in light of the recent downbeat readings the underscored Eurozone economic slowdown concerns. The German factory activity is expected to rebound slightly for the month of December. There are no significant macro news from the Euroland later on while the UK docket absolutely data-empty, with the focus remaining on the Brexit-related headlines for further trading momentum.

In contrast, the NA session sees a string of economic releases from the US, including the trade balance, unit labor costs (Q4 and good trade balance, all which will release at 1330 GMT. At the same time, the Canadian building permits will drop in alongside the speech by the BOC member Lane. Later in the session, New Zealand’s fortnightly dairy auction results will be released, soon followed by the Canadian Ivey PMI for January at 1500 GMT. The official US government crude stocks data will be published at 1530 GMT that will offer fresh impetus to the oil traders. Towards the NY close, the labor market report from New Zealand will be published at 2145 GMT.

EUR/USD dips below 1.14, focus on US unit-labor costs

The 10-week moving average (MA), currently at 1.1386, could be breached if the German factory orders for December, due at 07:00 GMT, miss expectations by a big margin, making Germany more vulnerable to a recession. 

GBP/USD stalls 3-day losing streak on delayed Brexit hopes

Wednesday lacks the UK important data and fewer political events are scheduled. Theresa May will travel Brussels to meet the EU policymakers and formally announce a renegotiation of her Brexit deal on Thursday. 

US Weekly Jobless Claims Preview: The trend is strong

Initial jobless claims are predicted to be 227,000 in the week ending February 1st down from 253,000 in the prior week.  The four-week moving average is 220,250 in the current week.

US Govt Official: Mnuchin and Lighthizer to hold trade talks in Beijing early next week

Reuters quoted a senior US administration official last hour, as saying that the US Treasury Secretary Mnuchin and the Trade Representative Lighthizer are likely to hold the talks on trade in Beijing early next week.