Forex news from the European trading session - 1 October 2018
Headlines:
- Eurozone August unemployment rate 8.1% vs 8.1% expected
- UK August mortgage approvals 66.4k vs 64.5k expected
- UK September manufacturing PMI 53.8 vs 52.5 expected
- SNB total sight deposits w.e. 28 September CHF 577.9 bn vs CHF 577.6 bn prior
- Eurozone September final manufacturing PMI 53.2 vs 53.3 prelim
- Germany September final manufacturing PMI 53.7 vs 53.7 prelim
- France September final manufacturing PMI 52.5 vs 52.5 prelim
- Italy September manufacturing PMI 50.0 vs 50.3 expected
- Switzerland September manufacturing PMI 59.7 vs 62.1 expected
- Switzerland August retail sales +0.4% vs +1.7% y/y expected
- Spain September manufacturing PMI 51.4 vs 52.6 expected
- UK's Hammond says there has been a hit to UK economy due to Brexit uncertainty
- Germany August retail sales -0.1% vs +0.5% m/m expected
- European Commission reportedly set to reject Italy's budget plans
- ECB's Coeure: Monetary policy normalisation has started, but it is a gradual one
- ECB's Hansson says he hasn't remotely thought about succeeding Draghi
Markets:
- CAD leads, JPY lags behind on the day
- European equities trade higher, FTSE MIB leads gains
- Gold down 0.50% to $1,186.51
- WTI up 0.23% to $73.42
- US 10-year yields up 2.4 bps to 3.086%
- Bitcoin down 1.09% to $6,570
It's the start of a new week, month, and quarter in markets and we're already off to a lively beginning. Things started in Asia (and from the weekend) as a NAFTA deal - at the time - was reported to be pretty much a home run and that helped the loonie start the day with a gap higher against the rest of the major currencies.
The deal was subsequently renamed to the USMCA and the loonie continued its fine form from Asian trading into European trading where it remains by far the standalone best performer on the day. USD/CAD started the session around 1.2840 but inched lower bit by bit to trade near session lows now under 1.2800 at around 1.2790.
The start to the day sees a bit of a mixed theme across markets. EUR/USD was dragged down earlier by more Italian budget worries from 1.1600 to a low of 1.1574. But as Italian bonds and stocks recovered, so did the single currency and EUR/USD now trades a little higher at around 1.1608.
The pound on the other hand was more "rangy" to some extent. The focus this week for the quid is on the Conservatives party conference and whether or not May can get the support from her fellow party members for Chequers. So far, there hasn't been anything notable from there and the pound has remained resilient to start the day. GBP/USD started around 1.3020 levels before moving towards 1.3050 before the UK manufacturing print was released. The data was pretty decent but nothing overbearingly positive - it's only manufacturing after all - and there wasn't much of a reaction as cable still trades between 1.3040-60.
Meanwhile, USD/JPY is one pair that remains underpinned and continues to tread waters around the 114.00 handle. The yen remains on the back foot today as market sentiment is stronger as a result of the USMCA deal as well as higher Treasury yields. The Nikkei closing at its highest levels since 1991 certainly doesn't do USD/JPY buyers any harm as well. The pair started trading around 113.75 and ends the session close to the highs near 114.00.
The aussie and kiwi were more subdued on the day despite better risk sentiment as both currencies were weighed down by poor weekend data from China. Both currencies moved to session lows against the dollar early in European trading but then losses leveled off a little as the session moved along. AUD/USD traded down to 0.7207 before recovering to around 0.7220 now in a 25 pips range today. However, NZD/USD still trades near the lows after having moved from 0.6604 to 0.6615 levels prior to this.
It's a mixed bag for markets as different currencies are focusing on different themes. But that only adds more colour to markets. Don't forget that this week is non-farm payrolls week so there's that to look forward to as well. And in case you forgot, China is on holiday this whole week so expect thinner trading in Asia as well as early Europe as a result.
