Forex Today: USD strength persists ahead of EZ CPI, All eyes on OPEC

Broad based US dollar strength persisted almost throughout the Asian session this Wednesday, although further gains remained capped, as nervous markets awaited fresh direction/impetus from the OPEC Vienna meeting, which begins later today.

Amongst the Asia-Pac currencies, the yen was the biggest loser, while Kiwi emerged the top gainer in wake of optimistic RBNZ Financial Stability Report (FSR). While Aussie was sold-into heavy sell-off in the Chinese iron-ore futures.

Going forward, all eyes remain on the OPEC Vienna meeting, which commences at 0900GMT today. Meanwhile, OPEC meeting related news-flow will continue to drive markets, having significant impact on oil prices and eventually on risk trends.

Data-wise, we just saw the release of the BOE Financial Stability Report (FSR) and bank stress test results, while we have the German employment data due on the cards in the European session, followed by the Eurozone flash CPI estimate and ECB Draghi’s speech.

Looking towards the North American session, the Canadian GDP report and a host of economic releases from the US docket, including the ADP jobs and core PCE price index, will be closely eyed. FOMC member Powell’s speech will also remain in focus later on Wednesday, alongside US EIA weekly crude inventories report.

Main topics in Asia

RBNZ's Wheeler: Expects the December CPI to be back in target band

RBNZ's Wheeler, speaking in parliament, notes that he expects the December CPI to be back in target band just over 1%.

Algeria will seek a reduction in oil output to 32.5mln bpd - RTRS

According to delegates quoted by Reuters, Algeria is reportedly seeking a cut in oil output to 32.2mln bpd.

RBNZ Financial Stability Report reviewed - ANZ

Analysts at ANZ explained that while the RBNZ believes the financial system is “sound”, its level of concern over the risks faced remains elevated (more elevated than we thought it would be, to be fair). 

Dalian Iron ore futures down 8%, Aussie hits fresh lows

Chinese iron-ore futures extend sell-off for the second straight session today, adding to yesterday more-than 6% drop, largely on the back of profit-taking and technical selling.

Key focus for the day ahead

OPEC meeting in Vienna begins today – Schedule

The highly anticipated OPEC oil output cut meeting commences today at 0900GMT. Meanwhile, a pre-meeting informal meeting begins at 8am local time i.e. 0700GMT.

Oil stages a goodish recovery ahead of OPEC meeting

After yesterday's sell-off, WTI crude oil rebounded sharply on Wednesday amid uncertainty over a deal to cut / freeze production from today's OPEC meeting. 

ECB’s Draghi: Price stability remains objective, bank has instruments to reach goal

Additional comments crossing the wires from the ECB President Draghi, via Reuters, this time on the monetary policy program and inflation outlook.

USD: Near term outlook consolidative - Westpac

Research Team at Westpac, suggests that the near term USD outlook consolidative with Bund-Tsy spreads, Italian sovereign spreads, the US yield curve steepener and US inflation breakevens all taking a breather after their relentless Trump driven run-up.

BOE Financial Stability Report: Outlook for UK financial stability remains challenging

The Bank of England (BOE) published its latest bank stress test results alongside the Financial Stability Report (FSR), noting that the Financial Policy Committee (FPC) is happy with overall capital buffers at banks.