Forex news from the European trading session - 17 July 2018
Headlines:
- EU and Japan sign trade agreement in Tokyo
- BOE's Carney says no-deal Brexit would be a material event for rates consideration
- Italy June final CPI +0.2% vs +0.3% m/m prelim
- BOE's Carney warns on potential Brexit risks
- UK May average weekly earnings +2.5% vs +2.5% 3m/y expected
- Italy May industrial orders +3.6% vs -1.3% m/m prior
- SNB now only seen raising rates in Q4 2019 - survey
Markets:
- NZD leads, JPY lags on the day
- European equities a little lower
- Gold up 0.10% to $1,242.23
- WTI crude down 0.18% to $67.94
- US 10-year yields flat at 2.85%
- Bitcoin up 0.63% to $6,704
It was a session bereft of key headlines, with only the UK labour market report being the only one worth mentioning. The session started in typical fashion as the greenback once again slipping across the board as the selling since Friday continued. It stayed that way for majority of the session ahead of the UK data which on the release saw sterling pick up some gains.
Cable jumped up to a high of 1.3269 on the release of the report - which came in within expectations, meaning that it does not derail a BOE August rate hike. And that saw sterling gain in the aftermath of that.
Things then were more quiet in the final hour before the dollar caught a slight bid with the dollar index testing a move above the 200-hour MA now.
Looking at individual currencies, EUR/USD started the session around current levels before moving up to a high of 1.1745 as the dollar weakened but has basically erased those gains as the greenback recovered. There was little catalyst for any other move in the pair so far today.
GBP/USD was the pair that saw the most action trading to 1.3250 levels on the back of the dollar's weakness before coming back down to 1.3240 ahead of the data release. And upon the data release, it climbed to highs of 1.3269 before faltering again as the dollar recovered.
Commodity currencies traded along with the dollar sentiment for the most part today with USD/CAD falling to a low of 1.3111 and AUD/USD rising to a high of 0.7438 as the dollar weakened but surrendered all of those gains late in the session.
As for NZD/USD, the pair traded to a high of 0.6841 in Asian trading on the back of a more positive core inflation measure but never looked like threatening an extension even as the dollar weakened - as key resistance levels lurk nearby.
All eyes turn towards Powell now, though I don't expect much fireworks to come from his testimony. But we'll see, maybe he'll surprise us all.
