Forex news from the European trading session - 10 July 2018
Headlines:
- ZEW says that July survey marked by great political uncertainty
- US June NFIB small business optimism index 107.2 vs 106.9 expected
- Germany July ZEW survey current situation 72.4 vs 78.1 expected
- UK May visible trade balance -£12.36 bn vs -£12.00 bn expected
- UK May manufacturing production +0.4% vs +0.7% m/m expected
- UK May monthly GDP +0.3% vs +0.3% expected
- Italy May industrial production +0.7% vs +0.8% m/m expected
- China raises anti-dumping tariff rates on optical fibre products from the US
- Switzerland launches dispute at WTO over US tariffs
- France May industrial production -0.2% vs +0.7% m/m expected
- Japan June preliminary machine tool orders +11.4% vs +14.9% y/y prior
Markets:
- USD leads, JPY lags on the day
- European equities mostly higher
- Gold down 0.35% to $1,253.24
- WTI crude up 0.53% to $74.24
- US 10-year yields up 0.5 bps to 2.862%
- Bitcoin down 3.63% to $6,452
The dollar started the session with mild gains and as we moved along, it evolved into a more serious bid after we got UK data risk out of the way. The early gains were mainly a follow through of a rebound in overnight trading after the dollar index managed to hold at a key support level.
The dollar's early gains saw notable losses in sterling and the yen for the most part as other major currencies stayed in a narrow range. But ahead of a slew of UK economic data at 0830 GMT, sterling rebounded and then went on to touch a high of 1.3301 against the dollar.
However, the data release was softer than expected and that resulted in a fall in sterling and cable went from 1.3290 levels to 1.3270 in a jiffy. But in the immediate aftermath, the dollar continued to extend its gains and touched session highs against the rest of the major currencies.
That momentum has been continuing up until now with the dollar still trading near the highs for the day as the dollar index looks to sustain a break of the 100-hour moving average.
Looking at individual currencies, EUR/USD was hovering around 1.1740 levels for the most part and moved to 1.1750 levels when sterling posted gains prior to the release of UK data. But the pair subsequently made its way lower and is now testing the 100-hour MA as the dollar continues to run rampant on the day.
USD/JPY has had a more subdued session but remained bid for the most part. The pair touched a high of 111.20 early on before making its way lower towards the 111.00 handle again, but eventually climbed and trades at the highs now with stocks holding out well and the dollar also gaining.
USD/CAD had a more subdued session with the pair trading between 1.3120-30 levels for the most part. When the dollar peaked during the session, the pair touched a high of 1.3142 and trades a tad lower currently as oil prices continue to stay firm with traders also keeping one eye on the BOC meeting to come.
As for the AUD and NZD, both were initially trading higher on the day as Asian stocks rallied but they soon gave up gains as the dollar momentum carried forward and is among the laggards for the day alongside the yen - despite equities doing well. This also comes as the Chinese yuan also performed poorly against the dollar today, erasing earlier gains as the session progressed.
