Forex Today: Yen strongest in Asia, USD to extend correction in Europe?

The yen was the top performer across the fx board in the Asian session this Wednesday, while the AUD underperformed, despite moderate strength seen in gold, copper and oil prices.

The US dollar extended its overnight retreat into Asia and underpinned a broad recovery amongst the majors, while the Japanese currency also garnered strength, after the Japanese cabinet raised its view on the economy for the first time since March 2015. The Kiwi also staged a minor-recovery, as the bulls shrugged-off worse-than expected NZ trade figures.

In the day ahead, the majors are expected to take cues from the broader market sentiment and USD price-action, as the economic calendar continues to remain light for the third straight session, with only the UK net public sector borrowings data to be reported in the European session. While the US docket offers the US existing home sales data and Eurozone consumer confidence data.

Main topics in Asia

UK PM May wants an implementation phase to smooth Brexit process

As per the Financial Times report, UK PM Theresa May has said she wants to negotiate transitional Brexit deal, that would help smooth Britain’s exit from the EU after 2019.

ECB’s Praet: “We see moderate but strengthening growth”

European Central Bank (ECB) executive board member and chief economist Peter Praet was on the wires earlier on the day, speaking on the Eurozone growth outlook in an interview with a Dutch newspaper Telegraaf.

Japan Govt upgrades view of economy, first upgrade since March 2015 - RTRS

The Japanese cabinet office upgraded its view of the economy, noting that the economy is in moderate recovery, Reuters reports.

WTI hits fresh weekly highs on US inventory draw

Oil futures on NYMEX extended its winning streak and built on previous gains after the bulls were bolstered by a surprising drawdown in the US crude stockpiles.

Key focus for the day ahead

US existing home sales preview - Nomura

Analysts at Nomura offered a preview for the next key US data event.

EUR/USD struggles to extend gains above 5-DMA

The EUR/USD pair is seen consolidating the Asian recovery below 5-DMA located at 1.0419, but manages to stay above 1.04 handle amid reduced demand for the greenback across the board.

Europe FX dominated by politics, commodity FX trapped by Trump – ING

In terms of relative performance in Europe, analysts at ING still expect GBP to fare poorly as the European politicians have little incentive to offer the UK an attractive deal post Brexit.

USD: Back to the 80s - ING

Chris Turner, Global Head of Strategy at ING, suggests that the markets are expected to back Trumponomics with a benign dollar rally and highest conviction…