Forex news from the European morning session - 2 April 2019
Headlines:
- UK PM spokesman: May is still opposed to second Brexit referendum
- Australia forecasts budget surplus of A$7.1 billion in 2019-20
- UK March construction PMI 49.7 vs 49.8 expected
- ECB's Coeure: Monetary policy normalisation will be a very long and gradual process
- EU's Barnier: Strong justification would be needed to agree on long Brexit delay
- Switzerland March CPI +0.5% vs +0.4% m/m expected
- Bitcoin spikes by more than 10% to over four-month highs
Markets:
- USD leads, NZD lags on the day
- European equities inch higher; E-minis flat on the day
- US 10-year yields down 2.5 bps to 2.475%
- Gold flat at $1,287.90
- WTI up 0.8% to $62.05
- Bitcoin up 16% to $4,795
Markets were generally steady with few headlines to really move things along in the European morning. The pound was lively as cable bounced around between 1.3030 and 1.3070 after having moved lower in Asian trading as the UK parliament failed to achieve a majority option in the indicative votes process overnight.
But it was the dollar that held firm throughout, with risk sentiment a little bit flat on the day. US equity futures remain subdued despite a bit of a nudge higher in European stocks and bond yields are slightly lower after the surge higher overnight. That is offering currencies little direction as USD/JPY stays near flat levels at 111.36.
The aussie and kiwi are the notable laggards on the day with the former falling after the RBA statement had several nuances hinting at a more easing bias. AUD/USD fell from around 0.7100 to a low of 0.7065 and stuck around 0.7070-90 thereafter.
Meanwhile, the kiwi is down after NZ Q1 business confidence slumped and prompted the rates market to price in further odds of a RBNZ rate cut in the coming months. NZD/USD eased from 0.6780 at the start of the session to trade around 0.6765-70 levels for the most part.
Other major currencies were generally subdued with EUR/USD stuck around the 1.1200 handle. But the big mover in markets was Bitcoin as the cryptocurrency came back from the dead to trigger stops above $4,200 in a surge higher by more than 20% that saw it briefly break above the $5,000 level.
There wasn't much explanation for the move there but there is talk about recent reports showing USDT (Tether) transactions hitting a record in March - double that of February - and prompted a sudden shock as circulating supply increased substantially and that contributed to the jolt higher across the crypto market. If you have any other reasoning, feel free to share it in this post.
