Forex Today: Markets turn cautious, eyeing UK labor data, Fedspeak

Here is what you need to know on Tuesday, November 12:

Asian FX affair witnessed a negative shift in risk sentiment, as investors moved away from higher-yielding/ risk assets amid lingering concerns over China’s economic concerns and US President-elect Donald Trump’s potential protectionism policies.

Citing people familiar with the matter, Bloomberg News reported that Chinese regulators are considering cutting deed tax for home buyers to as low as 1%, down from the current rate of up to 3%. However, this additional support measure from China failed to provide any zest to traders.

Asian stock markets gave up early gains and turned into negative territory as traders took account of the tensions mentioned above. Semiconductor stocks led the decline in the regional indices following a Reuters report that the US told Taiwan Semiconductor Manufacturing Co. are said to halt shipments to Chinese customers of advanced chips often used in AI applications.

The US Dollar (USD) continues its upbeat momentum following Donald Trump's victory in the US elections, capitalising on ‘Trump trades’ while fading expectations of future interest rate cuts by the US Federal Reserve (Fed) also keep the buying interest around the USD alive and kicking.

Potentially inflationary tariffs and immigration policies under a Trump presidency have seen markets trimming bets of a quarter-point Fed interest rate cut on Dec. 18 to about 65% from about 85% seen before the election, according to CME Group's FedWatch Tool.

Across the G10 FX board, USD/JPY seems to have stabilized above 153.50 after swinging between 154.00 and 153.40 earlier in the Asian session. The absence of Japanese verbal intervention, sustained US Dollar strength and uncertainty over the Bank of Japan (BoJ) rate hikes help keep the pair afloat.

AUD/USD trades with sizeable losses near 0.6550, undermined by weak Australian Westpac Consumer Confidence data, Chinese economic concerns, falling commodity prices, and a firmer US Dollar. Meanwhile, NZD/USD holds lower ground near 0.5955, tracking the weakness in the Aussie.

EUR/USD resumes its downtrend, approaching 1.0600 in early Europe. Germany’s political risks and bets for aggressive easing policy by the European Central Bank (ECB) weigh on the Euro. Speeches from ECB policymakers and the German ZEW Economic Sentiment data will provide fresh trading incentives.

GBP/USD extends its decline toward 1.2800 as traders look to UK labor market data for some saving grace.

USD/CAD rebounds to near 1.3950 amid US Dollar demand and falling WTI oil prices. The US oil is down 0.50%, trading below $68.  

Gold maintains a three-day downtrend, currently testing two-month lows just above $2,600. Speeches from several Fed policymakers will be closely scrutnized for fresh insights on the Fed’s rate cut outlook.