Forex Today: AUD cheers China data, UK jobs, US CPI & Fed in focus

Quiet trading extended into Asia for the second straight session today, as investors continued to remain nervous ahead of a Big FOMC day. Moreover, steady Chinese industrial and retail sales figures had limited impact on the markets, except for the Antipodeans. The Aussie was the bigger beneficiary of the two, while most other majors stuck tight trading ranges, as the greenback consolidated the downside across the board amid subdued treasury yields.

Looking ahead, we have a data-empty EUR docket, with the German final CPI data already reported, hence, focus remains on the UK jobs data. However, the main risk events for today remain the US CPI, retail sales and FOMC decision slated for release in the NA session.

Main topics in Asia

ECB shifts some reserves to Yuan from US dollars - Reuters

Reuters report released in the overnight session said the European Central Bank (ECB) switched EUR 500 million worth of its US dollar reserves to Chinese Yuan (CNY). 

Increased US oil output is hampering market rebalancing: OPEC

Increased oil production in the United States is hampering efforts to balance out market supply and demand, OPEC said on Tuesday.

China data dump: Retail sales and industrial production beat estimates

China’s retail sales YoY, came in in +10.7% vs 10.6% exp and 10.7% last, with industrial output YoY at 6.5% and 6.3% exp and 6.5% last. 

London’s massive fire: More-than 200 people trapped

A massive fire has broken out in a 24-storey London apartment block with reports of more-than 200 people being trapped, courtesy The Guardian.

Key Focus ahead

EUR/USD - Will US CPI overshadow Fed decision? Focus on 10-year treasury yield

Despite the bearish RSI divergence and ‘Hanging Man’ reversal on the daily chart last week, the losses in the EUR/USD have been miniscule. 

Potential for the USD to rally out of the FOMC - NAB

In the view of FX strategists at National Australia Bank (NAB), if the Fed maintains its inflation outlook and hawkish bias, despite recent softer data, the US dollar is likely to rally hard on the FOMC decision.

Key US data previews: Fed, retails sales, CPI - Nomura

Analysts at Nomura offered a preview of the forthcoming key US events.

BOJ stuck between a rock and a hard place – Goldman Sachs

Jonathan Xiong, head of the Fixed Income Alternatives Group at Goldman Sachs Asset Management, expects the BOJ to maintain the yield curve control (YCC) policy framework for a long period of time.

GBP/USD Forecast: further recovery only above 1.2770; important macro data and FOMC decision in focus

The pair was seen consolidating in a narrow range during Asian session on Wednesday as traders now look forward to the UK monthly jobs data and the much awaited FOMC decision for some fresh impetus.