Eurozone inflation

The risk-on sentiment was the key underlying theme in Asia this Wednesday, as the Asian stocks staged a bounce amid a potential US-China trade war truce while markets ignored sluggish Chinese manufacturing PMI report. Economic data out of Europe yesterday have disappointed analysts as the euro zone economy grew less than expected in the third quarter.

The Japanese yen edged lower against the dollar, following the BoJ’s downward revisions to its inflation and growth forecasts. The BoJ kept its monetary policy settings unchanged at its October monetary policy meeting held earlier today.

The EUR calendar remains busy, starting with the second-liner German retail sales data releasing at 07:00 GMT. the main event risk for the EU session remains the Eurozone flash CPI estimate, while, a slew of ECB-speaks is due on the cards around 09:00 GMT

Wednesday sees Pound’s economic calendar data-free, and the London market session will see investors facing down continued Brexit headlines that showcase the still-vast distance between the two sides of the EU-UK negotiations

Moving on, the US ADP jobs report will be published at 12:15 GMT, a precursor to the key US payrolls data due this Friday. Also, the US employment cost index data will be eyed at 12:30 GMT for fresh hints on the upcoming US wages report. EIA Crude Oil Stocks change are due at 14:30GMT.

The bearish case may strengthen further if the US employment cost index beats estimates, signalling a pick-up in wage-price inflation. An above-forecast Eurozone CPI may offer some relief, however, for the EUR to find bids, the US employment cost index needs to miss estimates by a big margin.

Gold prices fell on Wednesday and traded near two-week lows, as risk appetite improves, with the yellow metal being hit by the double whammy of lost safe haven appeal and a stronger US dollar. Oil prices climbed for the first time in three days on Wednesday, but rising supply and fears over the outlook for demand amid the U.S.-China trade war kept pressure on the market. This comes despite API reporting another significant increase in stocks on Tuesday, something that was largely shrugged off by investors at the time.