Forex news from the European morning session - 17 December 2018
Headlines:
- France's Le Maire says budget deficit will be as close as possible to 3%
- Meanwhile, EU says no further meetings with UK over Brexit is foreseen...
- UK PM spokesman says Brexit talks between UK and EU officials are still ongoing
- Incoming ECB member Wunsch says central bank can delay rate hikes if economy slows more than expected
- Eurozone October trade balance €12.5 billion vs €14.0 billion expected
- Eurozone November final core CPI +1.0% vs +1.0% y/y prelim
- Russia oil output said to be at a record high of 11.42 mil bpd so far in December
- Theresa May's Black Knight Brexit strategy: 'tis but a scratch'
- Italy's Conte, Salvini, and Di Maio said to reach accord on budget
Markets:
- CHF leads, USD and CAD lags on the day
- European equities a little lower; E-minis down 0.1%
- US 10-year yields down 0.7 bps to 2.882%
- Gold up 0.1% to $1,239.75
- WTI up 1.1% to $51.77
- Bitcoin up 6.3% to $3,356
The new week started off in rather subdued fashion with major currencies still failing to awaken from their weekend slumber as risk was cautiously optimistic during late Asian trading. But as European trading began, the cautious tone in equities turned slightly more negative as equities dipped a little at the open.
That still didn't do much for currencies but there was mild dollar weakness across the board notably, though trading ranges were still very much narrow for the most part. Risk failed to offer much direction for markets so far and as the session progressed, the dollar weakness started to gain some traction.
EUR/USD started the session around 1.1315 before extending those gains to 1.1345 mid-way through. The pair then continued its track higher to 1.1354 before settling around 1.1340 currently ahead of US trading.
GBP/USD was among the key beneficiaries as well with the pair starting the day around 1.2580 levels before racing to 1.2620 and then touching a high of 1.2647 before backing down to 1.2610 levels currently. All the action seen here was mostly on the back of dollar weakness.
USD/JPY was also impacted by that as the pair started the day around the highs at 113.50 before slowly climbing to settle near the lows now close to 113.25. Both the aussie and kiwi are also posting gains against the dollar with AUD/USD ranging between 0.7175-85 for the most part while NZD/USD moved from 0.6795 to a high of 0.6818 before settling near the 0.6800 handle currently.
Despite gains in oil prices, there was very little movement for USD/CAD on the day as the pair moved to a low of 1.3373 earlier but now is back to unchanged levels of 1.3383 ahead of North American trading.
In what should be the final proper trading week of the year, the focus of markets is on the FOMC meeting that is to come on Wednesday. Expect more dollar-related movements ahead of the meeting as traders look to position themselves and gauge market expectations ahead of the Fed decision. As mentioned at the start of the day, there was a hint of 'buy the rumour, sell the fact' kind of play coming into this week but it looks like traders are starting to brace themselves for a possible dovish outcome - which looks to be the more plausible eventuality thus far - by the Fed already.
Expect the focus of North American trading to turn towards the dollar and Fed narrative as well with risk among the other key themes to watch out for.
