Forex news from the European morning session - 19 November 2018
Headlines:
- EU's Weber says draft Brexit deal will not be renegotiated
- Spain could possibly throw a wrench into May's Brexit plan
- UK PM May says determined to deliver her Brexit deal
- EU's Barnier: Still need to agree procedures on how to extend transition period
- Italy's Salvini says could oppose Franco-German Eurozone budget proposal
- Eurozone September construction output +2.0% vs -0.5% m/m prior
- David Davis says he doesn't think there will be a leadership contest
- Eurozone September current account balance €16.9 billion vs €23.9 billion prior
- Goldman Sachs expects a broad dollar decline in 2019
- Tory lawmaker Simon Clarke says today is a crucial day for Theresa May's future
- ECB's Villeroy: No-deal Brexit only has limited impact to Eurozone economy
- Italy's Buffagni: Key points of draft budget will not change
- ECB's Villeroy: Policy normalisation will be gradual and predictable
Markets:
- CHF leads, NZD lags on the day
- European equities mildly higher; E-minis down 0.4%
- US 10-year yields up 1.8 bps to 3.081%
- Gold down 0.15% to $1,219.63
- WTI flat at $56.46
- Bitcoin down 3.96% to $5,233
The session started off with quiet tones across the board as the aussie and kiwi were the only notable movers being dragged lower amid US-China trade tensions as the APEC summit failed to reach a final statement for the first time in history.
European equity futures were trading mixed to begin with as E-minis was down by about 0.2% while Asian equities traded higher during the closing stages. But risk bounced a little when the European cash equity market opened, though that failed to spark life into markets just as much.
But the pound did managed to squeeze out some early gains brushing aside Brexit worries. The main story in the Brexit saga now is that of the leadership letters. Headlines have gone quiet as markets wait with abated breath on clues for that. The Sun reported over the weekend that there about 42 letters. Meanwhile, The Times reported earlier that there were about 50+ MPs ready to pledge to submit their letters by the end of today.
Despite that, cable moved up to a high of 1.2884 before sticking around 1.2860 levels. But that all came crashing down quickly after May's address at the CBI conference earlier. The pound dipped heavily and cable went down to a low of 1.2795 before steadying around 1.2820 now.
May did not offer anything new in her speech and it was rather awkward as she's speaking about carrying on with her job when we don't even know if she'll still be in office come the end of tomorrow.
Aside from the pound, equities also got a bit of a hit during the session after Nissan's chairman Carlos Ghosn was allegedly arrested, leading to a 13% fall in Renault shares. That led to a bid in the swissie with USD/CHF falling from 0.9990 to a low of 0.9957 before settling close to 0.9970 currently.
This comparison chart of EUR/CHF and Renault shares earlier in the day highlights the impact of the change in sentiment towards the swissie:
With equities sentiment slipping a little, that compounded losses in the aussie and kiwi. AUD/USD traded around 0.7315 early on before slipping to a low of 0.7293 where it trades close to now. Likewise for NZD/USD as the pair traded around 0.6840 levels earlier before slipping to a low of 0.6820 and continues to hover near the floor currently.
There wasn't much movement in the euro and yen as both currencies held steady on the day and remains relatively unchanged against the dollar ahead of US trading.
