Forex news from the European morning session - 1 July 2019
Headlines:
- Russia's Novak: All ministers approve 9-month OPEC+ cuts extension
- Bulgarian PM rules out Georgieva in race for European Council top job
- Jeremy Hunt says would decide by 30 September if Brexit deal is possible
- EU leaders' summit suspended again, to reconvene again tomorrow
- ECB's Lane: Further easing can be provided if required
- Fed's Barkin: Weaker economic growth would force conversation about interest rate cuts
- UK June manufacturing PMI 48.0 vs 49.5 expected
- Eurozone June final manufacturing PMI 47.6 vs 47.8 prelim
- Germany June unemployment change -1.0k vs 0.0k expected
- Italy June manufacturing PMI 48.4 vs 48.7 expected
- Spain June manufacturing PMI 47.9 vs 49.5 expected
- Fed's Clarida: There's more uncertainty about trade negotiations, global growth prospects
Markets:
- USD leads, CHF lags on the day
- European equities higher; E-minis up 1.1%
- US 10-year yields up 1 bps to 2.015%
- Gold down 1.2% to $1,391.91
- WTI up 2.9% to $60.14
- Bitcoin down 10.4% to $10,945
Markets began the European morning in a more cheerful mood with the focus being on the trade truce struck between US and China over the weekend via the Trump-Xi meeting. The dollar gained traction and picked up early bids as markets viewed that the Fed would be less aggressive in easing policy over the coming months.
USD/JPY rose to a high of 108.53 as yields and equities moved higher while EUR/USD fell to 1.1330 from 1.1350 earlier on. Cable also lost ground falling from 1.2690 to 1.2655 as the dollar firmed in early trades.
The release of more disappointing PMI data from Europe and UK saw the euro and pound marked lower with EUR/USD slipping to a low of 1.1317 and GBP/USD falling to a low of 1.2634. But soon after, the dollar gave back some of its earlier gains amid a pull back in Treasury yields.
I reckon the handful of poor PMI releases throughout the day tempered with market optimism a little and we're seeing yields level off a little ahead of North American trading.
That gave EUR/USD a bit of a push back up to near 1.1350 now with USD/CAD noticeably at flat levels on the day as well now.
There's still plenty for markets to digest with equities still looking optimistic but I reckon eventually traders will realise that a trade truce just won't cut it and unless we're moving towards an actual deal, the economic outlook remains more cloudy than it is clear.
