Forex news from the European morning session 29 Feb
News:
- PBOC cuts RRR by 0.5%
- BOE's Carney says monetary policy must remain accommodative
- BOJ Kuroda says government's growth strategy vital for sustainable inflation
- Eurogroup head Dijsselbloem says "we are not in crisis mode"
- Germany says Greek debt and refugee crisis are separate issues
- Sapin will cut 2016 French inflation forecast
- Saudi's will continue to work with all main producers to limit volatility
- UK 1 year inflation expectations rise to 1.5% vs 1.2% prior
- UBS says EURGBP could rise to parity if UK vote for Brexit
- Euro under pressure again after softer CPI data
- Chinese equity markets close lower 29 Feb
- Option expiries 10am NY cut today 29 Feb
Data:
- February 2016 Eurozone HICP flash -0.2% vs 0.0% exp y/y
- Italy HICP Feb flash mm -0.4% vs -0.1% exp
- January 2016 UK mortgage approvals 74.600k vs 74.000k exp
- Germany import price index Jan mm -1.5% vs -1.0% exp
- Switzerland KOF leading indicators Feb 102.4 vs 99.5 exp
- Spain current account balance Dec +€4.49bln vs +€2.11bln prev
The euro was already on the back foot with traders fearing the the increased chances of ECB easing further next week, and that mood was intensified after the release of the latest CPI data.
Early trading saw a short-lived rally above 1.0950 as equity markets wobbles but it wasn't long before that correlation gave way to the ECB concerns and we started to nudge lower again. Good demand into 1.0900 has been chewed through to test the next tranche of bids into 1.0880.
EURGBP had failed to breach 0.7900 on a bit of month-end buying first thing but then turned down to look at 0.7850 while EURJPY dropped to take out the barrier option at 123.00 with yen demand adding to the downward pressure. That move also capped USDJPY into 113.00.
The PBOC cut RRR by 0.5% but it was a muted market reaction with AUDUSD posting a 40 pip gain to 0.7168 only to drift back almost to whence it had come.
USDCAD found good support on softer oil prices and saw a rally from 1.3520 to 1.3587 before reversing the move as oil found dip demand.
Month-end flows haven't had a major impact as yet but we still have the 16.00 GMT fix to negotiate.
