Forex news from the European trading session - 20 June 2018
Headlines:
- EU to impose €2.8 billion worth of duties on US imports as of Friday
- Iran says one way to resolve situation is return to 100% compliance
- UK June CBI trends total orders 13 vs 2 expected
- Special meeting on EU migration policy to take place on Sunday in Brussels
- ECB's Villeroy reiterates that rates are to stay unchanged 'until at least summer 2019'
- UK upper house of parliament to consider changes to Brexit laws on meaningful vote around 1830 GMT
- ECB's Nowotny says that he sees euro depreciating against the dollar
- ECB's Villeroy says first rate rise could come in summer 2019
- Iran's Zanganeh says no plans to join OPEC+ JMMC meeting
- BOJ's Amamiya expects Japanese economy to keep growing stably
- ECB's Villeroy says growth in France remains good
- Germany May PPI +0.5% vs +0.4% m/m expected
- OPEC+ didn't reach a consensus on optimal output growth - report
Markets:
- AUD leads, EUR and CHF lags on the day
- European equities are all higher
- Gold down 0.14% to $1,272.89
- WTI down 0.02% to $65.06
- US 10-year yields flat at 2.896%
- Bitcoin down by 1.05% to $6,625
The session started off with little action as markets recover from yesterday's risk-off tone. Asian equities soared into the close, propping up yen pairs with USD/JPY touching a high of 110.25 as a result. That spilled over to European trading with stocks in Europe all trading higher on the day as well.
The greenback stayed bid for the most part, as the dollar index continues to trade above the 95.00 handle. EUR/USD then inched lower towards 1.1570 levels before falling to a low of 1.1537 after ECB's Nowotny attempted to jawbone the euro. Nowotny said that the euro should depreciate against the dollar on the back of "differences in interest rate policies".
If anything, it highlights what sort of discussions take place behind closed doors in the ECB and it shows that they would prefer a lower euro in order to drive inflation higher on a consistent path. EUR/USD saw an immediate bounce after testing Friday's lows and have stayed around 1.1550 levels for the most part thereafter.
Meanwhile, cable was weighed down early in the session as it fell to year's lows ahead of the vote at the House of Commons today. It's been a steady track lower for GBP/USD though the range today remains somewhat subdued. The vote is reported to take place around 1830 GMT. You can refer to the post here for some background.
USD/JPY peaked early in the session as the Nikkei came to a close, trading to session highs of 110.25 but ran into resistance near the 110.20-25 level. Since then, the pair has been trading a little lower being almost flat on the day now as it holds near the 110.00 handle.
Apart from that, there was little action seen for the aussie and kiwi as AUD/USD trades around the 0.7390-00 levels for majority of the session. The aussie remains supported as risk sentiment improved but is struggling to make its way past 0.7400 still.
The NZD remains a little pressured as cross-selling against the AUD weighs on the kiwi after AUD/NZD broke above the 100-hour MA and trades near session highs as we move towards US trading.
In other news, there's also a bunch of OPEC headlines on the day but if you need a good understanding on what is going on then this is what it comes down to at the end of the day. Right now, Iran remains the outlier in not wanting to go forth with an increase in oil output with regards to the OPEC+ agreement. Despite that, Saudi Arabia remains confident that there will be a consensus come Friday. Oil prices have traded lower as we get into US trading later with WTI hovering near the lows now at $65.06.
Despite oil holding up relatively well earlier in the session, USD/CAD still made its way to one-year highs breaking above the 1.3300 handle. For me, it's more of a technical push and with oil prices staying subdued it's making for a good case for the pair to continue to run higher.
And to end the session, the EU decides to hit back at the US with tariffs of its own. Though, the amount in question is more of a pinch than a punch to be honest.
