Forex news from the European morning session - 1 March 2019
Headlines:
- North Korea: UN sanctions must be lifted for there to be no missile tests
- Eurozone February preliminary CPI +1.5% vs +1.5% y/y expected
- UK January mortgage approvals 66.8k vs 63.4k expected
- UK February manufacturing PMI 52.0 vs 52.0 expected
- BOE's Carney: UK business investment decline is 'huge'
- Eurozone February final manufacturing PMI 49.3 vs 49.2 prelim
- Germany February final manufacturing PMI 47.6 vs 47.6 prelim
- France February final manufacturing PMI 51.5 vs 51.4 prelim
- Italy February manufacturing PMI 47.7 vs 47.2 expected
- Switzerland February manufacturing PMI 55.4 vs 53.5 expected
- Spain February manufacturing PMI 49.9 vs 51.7 expected
- Germany January retail sales +3.3% vs +2.0% m/m expected
Markets:
- NZD leads, JPY lags on the day
- European equities higher; E-minis up 0.6%
- US 10-year yields up 1.5 bps to 2.73%
- Gold down 0.4% to $1,308.50
- WTI up 0.2% to $57.36
- Bitcoin up 0.2% to $3,809
There wasn't much notable headlines on the session as market movements were predominantly dictated by improving risk sentiment since Asian trading. Equities are trading higher as Chinese economic data showed some recovery, easing concerns about global growth slowdown. Risk sentiment was also buoyed by rallying Chinese stocks after MSCI decided to increase the weighting of said Chinese shares in its basket.
The more positive mood spilled over to European trading and that helped to see USD/JPY move up from 111.70 to 111.98 before gains leveled off to 111.80 levels now. The risk-on tone also helped the aussie and kiwi pull off gains to trade at the highs now with NZD/USD rising from 0.6815 to 0.6830 levels currently.
USD/CAD also continues to slip a little despite oil gains evaporating but price action continues to suggest sellers are in control, with price falling below the 200-day moving average to trade around 1.3130 levels now. Of note, there is the key trendline support at 1.3118 for the pair alongside large expiries of 1.3150 that is keeping the tug of war at play for buyers and sellers.
EUR/USD had good two-way action too with price falling to a low of 1.1353 as the dollar held firm following a dip in Spanish manufacturing PMI data. But the pair bounced off the 200-hour moving average to rise back to the highs now close to 1.1400 ahead of North American trading.
The pound was mostly pressured as cable traded around 1.3240-50 levels before taking a quick dip to 1.3220 in the past hour but price leaned on near-term support levels to hang on at the 1.3240 level now as Brexit developments continue to sit in limbo.
Looking ahead, I would expect risk sentiment to still be the dominant theme as we wrap up the week so keep an eye on USD/JPY and the 112.00 handle if anything else.
