USD Extends Rally, AUD/USD May Rise on GDP as Asia Stocks Wobble


Asia Pacific Market Open Talking Points

  • Swiss Franc weakened after better-than-expected European data
  • US Dollar extends rally following local non-manufacturing PMI
  • Aussie may rise on GDP, market mood in Asia trade may sour

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Key FX Developments Tuesday

A volley of better-than-expected European PMI data from Italy, France and Germany weighed against the anti-risk Swiss Franc as a regional haven. Meanwhile, the US Dollar outperformed following rosy domestic non-manufacturing PMI data as local front-end government bond yields rallied. This signaled firming Fed rate hike expectations.

However, the uptick in sentiment after the data lacked follow-through as the S&P 500 ended the day slightly to the downside. A lack of fresh updates on US-China trade talks seemed to keep markets in suspense after recent progress failed to offer much of upside gains. S&P 500 futures are pointing lower, suggesting the market mood could be pessimistic as we head into the Asia trading session.

Wednesday’s Asia Pacific Trading Session

The British Pound is aiming lower in early Wednesday trade after a report from Reuters noted that EU-UK Brexit negotiations failed to reach a deal on Tuesday. Lately, Sterling has been rallying as the markets slowly priced out chances of a ‘no-deal’ Brexit by the March 29 deadline. GBP/AUD seems at risk to a turn lower looking at technical cues as significant bullish progress probably needs more fundamental backing.

The Australian Dollar, after showing a minimal reaction to a speech from RBA’s Governor Philip Lowe, is looking to a domestic 4Q GDP report. Lately, Australian economic news flow has been tending to increasingly outperform relative to economists’ expectations, opening the door to an upside surprise. This may inspire near-term AUD/USD gains, but follow through would require technical confirmation.

US Trading Session Economic Events

USD Extends Rally, AUD/USD May Rise on GDP as Asia Stocks Wobble

Asia Pacific Trading Session Economic Events

USD Extends Rally, AUD/USD May Rise on GDP as Asia Stocks Wobble

** All times listed in GMT. See the full economic calendar here

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