Forex news from the European trading session - 10 September 2018
Headlines:
- UK PM May to hold a Cabinet meeting this week to discuss no-deal Brexit
- Turkey's Albayrak says that economic balancing has started
- Eurozone September Sentix investor confidence 12.0 vs 14.3 expected
- UK July manufacturing production -0.2% vs +0.2% m/m expected
- UK July GDP +0.3% vs +0.1% m/m expected
- SNB total sight deposits w.e. 7 September CHF 576.5 bn vs CHF 576.2 bn prior
- Italian bonds continue resurgence as Tria signals drop in yields
- Bank of France August industry sentiment indicator 103 vs 102 expected
- Former Brexit junior minister says May's party could face a "catastrophic split"
- Fed's Rosengren says no need to quicken pace of rate hikes
Markets:
- AUD leads, CHF lags on the day
- European equities are higher; FTSE MIB leads gains
- Gold down 0.19% to $1,194.02
- WTI up 0.71% to $68.23
- US 10-year yields flat at 2.937%
- Bitcoin down 2.58% to $6,280
A session of very few notable headlines but there was some action to be had. Currencies were mostly mixed to start the day kept in tight ranges despite a poor performance by Asian equities to kick off the new week.
European equities also showed subdued tones to begin the session but there was a hint of a bid in the dollar that started all the action. EUR/USD fell from 1.1550 to a low of 1.1526 while at the same time GBP/USD fell from 1.2920 to a low of 1.2897. USD/CAD also pushed higher and closed in on the 1.3200 handle.
But as Italian bonds started to rally it resulted in solid gains for bank stocks and that dragged the FTSE MIB higher on the day, helping to lift the mood in regional equities. The dollar then surrendered its earlier gains and fell against most currencies with EUR/USD rising back to 1.1550 while GBP/USD touched a session high of 1.2943.
As markets continue with the cheery mood, there was a further selloff in the yen and swissie in particular and the euro and pound continued to benefit from it, alongside the aussie. EUR/USD rose to highs of 1.1580 levels as the single currency was also strongly bid against the CHF. While the pound retreated off its highs a little, the euro is still up there alongside the aussie which pushed to a high of 0.7127 on the day from the improved market sentiment.
USD/JPY was one of the more subdued pairs as both currencies are a little heavy on the day but the yen is the more heavy of the two to start off the week. The pair traded around 111.00 to 111.15 for the session.
Meanwhile, USD/CAD remains underpinned despite higher oil prices and improved market sentiment as Friday's Canadian jobs report continues to weigh on the loonie alongside the lack of positive developments on NAFTA over the weekend. The pair traded between 1.3170 to 1.3198 for the session.
The swissie is the weakest performing major currency on the day as Italian assets are roaring. The FTSE MIB is set for its biggest daily gain in more than 3 months, up by more than 2% now. But aside from the positive mood resulting in the unwinding of flows, there's quite a substantial offering of swissie and that brings about some possible hints of the SNB stepping in. That's something to be wary about.
Despite all the positive mood to begin with in Europe, there's still the overarching theme of global trade tensions and I reckon all it takes is just one negative headline to spark renewed fears in the market once again. Bond markets are basically flat right now so that's a bit of a tell that markets are not fully risk on just yet, and for good reason.
And this chart right here tells you very much that the US-China trade spat is going to carry on still for quite some time, risking fears of further escalation and uncertainties surrounding global trade.
