Forex news from the European trading session - 2 July 2018
Headlines:
- Trump and Kim may meet again in September - report
- Eurozone May unemployment rate 8.4% vs 8.5% expected
- UK June manufacturing PMI 54.4 vs 54.0 expected
- SNB total sight deposits w.e. 29 June CHF 576.4 bn vs CHF 576.7 bn prior
- Eurozone June final manufacturing PMI 54.9 vs 55.0 prelim
- Germany June final manufacturing PMI 55.9 vs 55.9 prelim
- France June final manufacturing PMI 52.5 vs 53.1 prelim
- Italy June manufacturing PMI 53.3 vs 52.5 expected
- Switzerland June manufacturing PMI 61.6 vs 61.1 expected
- Spain June manufacturing PMI 53.4 vs 53.6 expected
- Australia June commodity prices (SDR terms) +6.6% vs +3.6% y/y prior
- UK officials said to have come up with a new proposal on post-Brexit customs model - report
- Germany's CDU and CSU are said to meet again later this evening - report
- China continues to leave a sour mood in the equities space
Markets:
- JPY leads on the day, AUD lags behind
- European equities lower, but off the lows
- Gold down 0.33% to $1,249.02
- WTI crude down 0.07% to $74.10
- US 10-year yields down 2.5 bps to 2.834%
- Bitcoin up 7.47% to $6,340
Ahead of European trading, Chinese stocks led losses as trade jitters linger and the rout from last week continues into the start of July. That, and political woes from Germany didn't really help the risk environment all too much as equities were hammered across the board to start the day.
The nervous and cautious tones saw more flows into the dollar and yen, and as European traders enter the fray the euro and sterling were weighed down as well with the German political situation posing some uncertainty with the CSU and CDU parties yet to meet (they're only said to be meeting later in the evening).
It was very much straightforward trading for the most part, but the market suffered a bit of a hangover in the last two hours ahead of US trading - with a lack of movement and direction. But we have seen European equities claw back some of its earlier losses at the very least.
Looking at individual currencies, EUR/USD started the session around 1.1650 levels before falling to a low of 1.1626 - testing near the confluence of hourly moving averages. Buyers defended the level and the pair moved back higher and consolidated around current levels.
USD/JPY had a subdued day as it traded between 110.60-70 levels after an earlier attempt during Asian trading failed to firmly take out the 111.00 handle.
GBP/USD was dragged alongside the euro and fell from 1.3170 levels to a low of 1.3145, also testing the 100-hour MA and has subsequently stayed above it ahead of US trading.
Commodity currencies continue to be pushed lower on the day with the loonie having earlier taken a hit on the back of a poor start to the day for oil. But oil prices have recovered with WTI crude almost unchanged on the day and that's helped limit some of USD/CAD's earlier gains.
AUD/USD and NZD/USD (the latter especially) has made a steady track lower on the day as risk aversion encompassed today's trading, with flows out of equities and into bonds.
In terms of data, we had a slew of PMI readings across Europe but nothing to really change the backdrop of soft manufacturing and factory orders in the Eurozone that we're seeing. The market isn't too concerned about that with the focus being on politics and the negative investor sentiment, but the readings don't exactly shape up a positive picture for the industrial sector for the Eurozone in Q2.
Ahead of US trading later, Canadian banks will be closed so expect a thinner day in terms of liquidity with manufacturing data also set to be released for the US. To our Canadian readers, Happy Canada Day (although it was yesterday) and enjoy your break!
