From a technical, the selling pressure abated near a support marked by 61.8% Fibonacci Expansion level of the 1.1815-1.1432 downfall and subsequent rebound. The price action indicates that the uptick is backed by short-covering, which might now confront fresh supply near the 1.1430-35 region, previous support now turned resistance.
On the flip side, the 1.1385-80 region (61.8% Fibonacci Expansion level) might continue to protect the immediate downside, which if broken might turn the pair vulnerable to test 1.1345 horizontal level before eventually dropping to YTD lows, around the 1.1300 handle.
· Boosting trade within Asia is widely seen as the region's best safeguard, and that's pushing Japan, South Korea and Australia to pay more attention to its neighbors — particularly India, said Termsak Chalermpalanupap, lead researcher at ISEAS-Yusof Ishak Institute, a Singapore-based think tank.
The Australian government announced an ambitious "India Economic Strategy" in July. By 2035, Australia hopes to make India one of its top three export markets and the third biggest Asian destination for outward investment.
Late last year, South Korean President Moon Jae-in introduced a blueprint known as the "Southern Policy" that's focused on deepening ties with Southeast Asia. India — despite not being geographically part of Southeast Asia — will be Seoul's "key partner for cooperation" on that front, Moon said during a visit to New Delhi in July.
· The European Central Bank (ECB) is not expected to change much at its Governing Council meeting this week, despite a clear resurgence of risks for the euro zone.
The central bank will announce a rate decision Thursday with a subsequent press conference from President Mario Draghi. But it's unlikely to alter its communication strategy let alone its policy stance. Despite concerns over Italy and Brexit, as well as a clear tightening of financial conditions in the U.S. which could eventually spill over into Europe.
Draghi is still yet to confirm that the ECB will definitely end its quantitative easing program at the end of this year. This is a large bond-buying program that was brought in after the 2011 sovereign debt crisis to stimulate inflation and boost lending.
The focus Thursday will be on its current assessment of global risks and whether this translates into a change in wording for the ECB's written communication. The biggest dovish surprise and change in wording, which is expected by some economists, is a reassessment of the outlook from currently being "broadly balanced" to "tilted to the downside."
Meanwhile, the budget standoff in Italy will be a topic for discussion at the press conference, with Draghi expected to stress that it's not the ECB's job to help individual governments. Another topic should be the ongoing Brexit cliffhanger and whether higher interest rates from the U.S. Federal Reserve will lead to an unwanted tightening in the euro zone.
· Japan’s prime minister travels to Beijing on Thursday for his first formal bilateral summit with Chinese leaders in seven years as the Asian rivals seek to build on a thaw in ties against a backdrop of trade friction with Washington.
· UBS reported stronger-than-expected results on Thursday morning on the back of higher loan volumes, as well as strong growth in equities and foreign exchange trading.
Net profit hit 1.2 billion Swiss francs ($1.2 billion) for the third quarter of 2018, which was 32 percent higher than what the bank had reported for the same period last year. It also beat expectations, with analysts predicting a figure of 1.018 billion Swiss francs, according to Reuters.
· The ongoing trade spat between the U.S. and China is the biggest threat to the market right now, not the Federal Reserve's monetary policy, strategist Art Hogan said Wednesday night.
"I'm much more concerned about China and what that means in the long run than I am about what Fed Chairman Jay Powell's doing with monetary policy," Hogan, the chief market strategist at B. Riley FBR, told CNBC.
· Oil prices fell on Thursday as Asian and European stock markets plunged in the wake of Wall Street’s biggest daily decline since 2011, with investors shedding risk in an uncertain political landscape.
Brent crude oil LCOc1 fell 82 cents, or 1.1 percent, to a low of $75.35 before recovering a little to trade at $75.87 by 0900 GMT. The global benchmark has lost more than $10 a barrel since hitting a high of $86.74 on Oct. 3.
U.S. light crude CLc1 was 30 cents down at $66.52.
Reference: Reuters, CNBC
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