Forex news from the European trading session - 17 August 2018
Headlines:
- Eurozone July final core CPI +1.1% vs +1.1% y/y prelim
- Turkey's central bank resorts to old tactics to raise rates
- RBA's Ellis says wage growth could be slow to respond to tighter labour market
- US said to seek to pressure China to lift the yuan in talks - report
- Eurozone June current account balance +€28.5 billion vs +€4.6 billion prior
- The divergence between US and Chinese stocks continues to grow wider
Markets:
- JPY leads, GBP lags behind on the day
- European equities lower, FTSE MIB leads losses
- Gold up 0.28% to $1,177.39
- WTI up 0.63% to $65.87
- US 10-year yields down 1.5 bps to 2.852%
- Bitcoin up 3.03% to $6,445
The session started off quietly without much of a fuss as it looked to be a typical summer trading day in markets. Equities, bonds, and commodities were basically flat while currencies saw little movement.
Then, we saw some light action as the dollar was offered across the board but soon erased those losses as we approached mid-morning in Europe. But then the lira started to rear its ugly head once again and that led to the risk-off tones in the market as the rand also fell in tandem. As a result, the Japanese yen was bid as equities turned red and bond yields inched lower.
The dollar also saw some flows from that but it didn't amount to much and the greenback now trades mixed across the board.
Looking at individual currencies, EUR/USD started the session around 1.1380 before moving to a high of 1.1419 as the dollar weakened. The pair subsequently gave up gains to move back towards 1.1390 levels and soon fell to 1.1375 as risk-off mood started to take over. As we end the session, the pair moves back higher towards 1.1390 currently.
USD/JPY was trading sluggishly around 110.70-80 levels for majority of the session before falling to trade around 110.50-60 as markets turn risk-off with the lira weakening.
GBP/USD made an early move higher early in the session towards 1.2750 but then quickly erased the jump and fell back to 1.2720. The pair traded lower close to the 1.2700 handle as the dollar picked up some gains but now trades back close to 1.2715 as the session draws to a close.
Commodity currencies were more straightforward as the aussie and loonie traded based on the dollar's performance today. As the dollar weakened a little, but currencies neared session highs against the dollar before falling back a little on the day. Trading ranges remain subdued.
NZD/USD had a more resilient time despite the risk-off mood as the pair continues to trade near the highs above 0.6600 seemingly unmoved from all else that is happening in the market right now.
