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Asia Pacific Market Wrap – Canadian Dollar, Crude Oil, Nikkei 225, FOMC Minutes, UK CPI

  • Asia Pacific stocks generally upbeat, despite this the anti-risk Japanese Yen was little moved
  • Canadian Dollar followed crude oil prices lower despite API estimates of inventory decline
  • GBP/USD looks vulnerable ahead of UK CPI data and the FOMC minutes. USD may rise

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As expected, Asia Pacific benchmark stock indexes traded higher heading into Wednesday’s close, echoing gains from Wall Street. Japan’s Nikkei 225 was one of the best performing, rising about 1.40 percent. Australia’s ASX 200 also performed well, climbing roughly 1.14%. Even China’s Shanghai Composite rose, albeit cautiously, at 0.10%.

Despite this, the anti-risk Japanese Yen failed to extend its decline from yesterday as it traded rather mixed. Taking a closer look at trading dynamics reveal that the Nikkei 225 gapped higher and then shed some gains. A similar situation was seen in the ASX 200 to a certain extent. Failure to find directional bias could be as a result of investors erring on the side of caution ahead of today’s FOMC meeting minutes.

One notable standout though was the Canadian Dollar, which headed a little lower against its major counterparts. This was accompanied with weakness in crude oil prices despite preliminary API estimates that inventories contracted 2.13 million barrels in the previous week. Official DOE forecasts point to a contradictory 0.9k increase later today.

Besides the FOMC minutes, which could carry bullish implications for the US Dollar, markets will also be eying UK September inflation data. We saw British Pound gains on stronger-than-expected wage growth data yesterday and more upside surprises in CPI could add fuel to Sterling gains. However, recent negative Brexit headlines may keep GBP/USD under pressure. We shall see what markets prioritize.

We also have a couple of notable event risk coming up Thursday and Friday. Those are the Australian jobs report and Chinese GDP data. We will be covering said events live as well as how AUD/USD and other Aussie crosses react. You may sign up for them below:

Australian jobs report live webinar coverage (Begins 10/18 at 00:15 GMT)

Chinese GDP report live webinar coverage (Begins 10/19 at 01:45 GMT)

GBP/USD Technical Analysis

From a technical perspective, we may see British Pound declines against the US Dollar ahead. A bearish engulfing candlestick pattern, combined with a break under a near-term ascending trend line, poses as a risk. We saw a similar situation unfolded back in late September after GBP/USD temporarily rose after a bearish engulfing but ultimately turned lower.

A descent through the 38.2% Fibonacci extension at 1.3165 exposes the 23.6% level at 1.3072 in the event Sterling falls. Meanwhile a push above 1.3241 would overturn the bearish price signals.

GBP/USD Daily Chart

CAD, Crude Oil Prices Fall as Nikkei 225 Rises Before FOMC Minutes

Chart created in TradingView

What Else to Expect Ahead?

Australian Dollar Technical Outlook

New Zealand Dollar Fundamental Outlook

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter