Forex news from the European morning session - 12 November 2018
Headlines:
- Tusk said to have told UK that deadline for November summit is Wednesday night
- UK PM spokesman: Cabinet has backed PM in moving forward on Brexit; expects them to continue to do so
- Juncker: EU in truce with US on trade until year end
- EU ministers said to fail to agree on date for Brexit summit this month
- ECB's de Guindos: External demand is the main factor behind recent economic slowdown
- BOE's Broadbent: Brexit transition period is most crucial for central bank outlook
- BOE's Broadbent: There are signs of somewhat weaker economic growth in Q4
- SNB total sight deposits w.e. 9 November CHF 577.2 bn vs CHF 577.5 bn prior
- The pound is the major driver in currencies today
- The Canadian dollar is quietly outperforming today
- Bank of France October industry sentiment indicator 103 vs 104 expected
- Saudi oil minister: OPEC+ to do whatever it takes to balance market
- Brexit and Italy are back at it again
- EUR/USD falls below 1.13 for the first time since June 2017
Markets:
- CAD leads, GBP lags on the day
- European equities mostly lower, E-minis down 0.1%
- Gold down 0.22% to $1,207.16
- WTI up 0.60% to $60.55
- Bitcoin up 0.55% to $6,361
The session started off with the dollar slightly ahead but more so that the pound was weaker as hopes of a November Brexit deal continued to fade as we began the new week. That led to a weaker euro and when cable cracked well below 1.2900 to 1.2970, it inadvertently dragged the euro lower as well with EUR/USD falling quickly from 1.1305 to 1.1270 as well.
The break in EUR/USD pretty much set the tone for the session with the dollar staying bid as a result. But bear in mind, trading today is marred by thinner liquidity as North American traders will be away and the US Treasury market is closed. However, the dollar continued to reign supreme with the pound being pressured further as talks of a November summit were reported to be scrapped.
That led to GBP/USD sliding to a low of 1.2928 with EUR/USD also touching a low of 1.1240 during the session. Meanwhile, the dollar also gained against the aussie and kiwi with AUD/USD slipping to a low of 0.7188 and NZD/USD reaching a low of 0.6706 in mid-morning trading.
The yen traded sluggishly on the day as well with USD/JPY advancing from 114.05 to 114.21 earlier as E-minis traded about 0.4% at the start of the session. But as those gains pared, so did the advance and the pair settled around 113.90 until now.
The one currency that held its own against the dollar throughout was the Canadian dollar as oil prices surged to start the week after Saudi Arabia decided to cut exports from next month by 500k bpd. USD/CAD ranged between 1.3190 to 1.3210 for majority of the session with the loonie successfully holding off the dollar's advance.
But as we approach mid-day in Europe, the dollar is giving back some of its earlier advance and the pound also recovered a little on a headline stating that Theresa May has the backing of Cabinet, though as mentioned it should be taken into context.
However, with thin liquidity set to prevail, I would expect choppy trading very much until tomorrow and it wouldn't be surprising to see the dollar give back most of its gains seen earlier today. The technical break may be relevant but it's hard to confirm any moves on a day when Treasuries aren't trading and liquidity is basically exaggerating price action for the most part.
