In an annual speech on Tuesday outlining his priorities for the coming year, President Trump said that illegal immigration was an urgent national crisis and reiterated his vow to build a border wall.
Trump also said any trade agreement with China “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.”
· The dollar index against a basket of six major currencies was little changed at 96.072, after briefly touching a near two-week high of 96.135.
· The Aussie dollar was last down 1 percent at $0.7165.
The Reserve Bank of Australia has left its official cash rate at a record low of 1.50 percent since August 2016 and Governor Lowe had repeatedly emphasized the next move was more likely to be up.
The euro was little changed at $1.1400 after slipping 0.25 percent the previous day to its lowest since Jan. 28.
· EUR/USD Eyeing Germany Factory Orders as EU Slows, Risks Rise
EUR/USD may fall as Germany prepares to unveil its month-on-month Factory Orders data. Forecasts are at 0.3% percent with the previous at -1.0 percent. The French economy has sputtered recently while Italy has fallen into a technical recession, with the largest economy in the Eurozone only narrowly avoiding the latter’s fate. The impact of trade wars on China’s economy has had a negative knock-on effect on Germany’s growth even as fragmenting European politics generate their own uncertainty.
In the more immediate future, EUR/USD is trading slightly lower after re-testing 1.1478 and may reach closer to 1.1358 if the data disappoints. Conversely if the report comes in better than expected the pair might aim for 1.1435. For the time being EUR/USD is floating around 1.1406, possibly waiting for the outcome of the upcoming data and any major developments from the US President’s State of the Union address.
· USD/JPY is feeling the pull of gravity, having faced rejection at 110.00 for the third straight day. Trump's comments have had little impact on the S&P 500 futures and other related markets.
· Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.
The sources said that the U.S. delegation would begin arriving in Beijing over the weekend, following a break this week for Chinese New Year.
The new round of talks in Beijing, to be led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, was earlier reported by the Wall Street Journal, citing an unidentified senior administration official.
· “Anything out of the State of the Union that hints at the U.S.-China deal not working out, or more anti-trade rhetoric would be a negative for energy prices as demand would be lower if global growth keeps being downgraded,” said Alfonso Esparza senior market analyst, OANDA.
· Main points: President Donald Trump's second State of the Union Address
-Trump vows to build border wall, warns Democrats against investigations
-US President Donald Trump: Deal with China must end unfair trade practices
-Trump urges passing legislation for reciprocal tariffs
-Trump confirms meeting with North Korea's Leader Kim on February 27-28 in Vietnam
· Sterling will gain between 2 and 5 percent if Britain parts ways with the European Union with a divorce deal but will slide between 5and 10 percent in the event of a disorderly Brexit, a Reuters poll found on Wednesday.
“The rationale would be that markets are going to wait right up until the last possible moment to sell off in terms of how a no-deal might materialise. Markets will hold out for a last-minute breakthrough,” said George Brown at Investec.
“If that wasn’t to materialise then you will see a big, sharp depreciation,” Brown added, saying a deal would take form over time and so should be gradually priced into the currency, hence the more modest gains.
In one month’s time a pound will be worth $1.31, in six months $1.35 and in a year it will be almost 8 percent stronger at $1.40, according to the poll. Sterling was trading around $1.297 on Tuesday, having
· Oil prices edged higher for the first time in three sessions on Wednesday, although concerns over the outlook for the global economy capped gains.
U.S. West Texas Intermediate (WTI) crude futures were at $53.74 per barrel at 0153 GMT, up 8 cents from their last settlement. They closed down 1.7 percent on Tuesday.
International Brent crude oil futures were at $62.05 per barrel, up 7 cents, after closing down 0.8 percent in the previous session.
Global economic worries have weighed on market sentiment in recent days, offsetting support from signs that global supplies are tightening.
· Crude oil prices fell but the driver of the drop was not clear. The newswires cited soft US ISM data, but the drop started close to 4hours before its release. A raft of recognitions of Juan Guaido as Venezuela’s President from European capitals may have helped. with hopes that international pressure will shorten the political crisis there chipping away at worries about a prolonged supply disruption.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices put in a bearish Evening Star candlestick pattern, hinting the upswing from late-December lows may be ending. Initial support is in the 49.41-50.15 area, with a break below that setting the stage for a retest of the 42.05-55 zone. Alternatively, a push above the February 4 high at 55.75 targets the 57.96-59.05 region next.
Reference: Reuters, CNBC, Daily FX
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