Forex news from the European morning session - 20 November 2018
Headlines:
- EU says aware of Spain's concerns on Brexit and Gibraltar
- BOE still have their hands tied as Brexit uncertainty dominates UK landscape
- Brexit: Theresa May to head to Brussels tomorrow to meet with Juncker
- UK November CBI trends total orders 10 vs -5 expected
- RBA's Lowe: Suspects unemployment rate could go to 4.5% without generating wage pressures
- ECB's Nowotny: Sees no reason to deviate from current growth forecast
- UK Supreme Court rules out application to appeal case to reverse Article 50
- Money markets no longer fully pricing in ECB rate hike in 2019
- Italy-Germany 10-year bond yields spread is blowing up
- IEA's Birol says oil market is entering "unprecedented" time of uncertainty
- Bitcoin plunge continues, down by 30% in the past week
- RBA's Lowe: Rates will likely rise at some point if economy advances as expected
- Theresa May's smile and wave Brexit plan
- Germany October PPI +0.3% vs +0.3% m/m expected
Markets:
- JPY leads, AUD lags on the day
- European equities lower; E-minis down 0.8%
- US 10-year yields down 2 bps to 3.042%
- Gold up 0.14% to $1,225.80
- WTI down 0.40% to $56.97
- Bitcoin down 8.14% to $4,396
It was an interesting session with just a bit of everything. The main mover on the session was the euro as the single currency struggled on the back of Italian budget worries after the Italy-Germany bond yields spread rose to a high of 335 bps earlier. That set off jitters across European assets as banking stocks slumped and the euro was sold off.
EUR/USD made its way towards a high of 1.1472 as the dollar started on the back foot but quickly reversed to a low of 1.1430. Thereafter, the pair maintained around 1.1440 levels before slumping again now towards 1.1415 as we head into US trading.
There was the usual Brexit saga to move the pound around as well with cable rising to 1.2883 earlier before giving back those gains alongside the euro, falling to a low of 1.2823 as May is reported to not be able to lobby changes at this Sunday's summit in Brussels. That prompted a quick response in Downing St as they set up a meeting with Juncker tomorrow instead. The pound recovered a little thereafter with cable now at 1.2840-50 levels.
Meanwhile, the aussie continues to be beaten down on the day as risk sentiment continues to sour. Tech stocks don't look like they're faring well in pre-market trading and the negative mood is weighing on risk assets on the day.
AUD/USD recovered from early losses to 0.7301 at the start of the session but quickly fell again as cross selling in AUD/NZD - as cited by traders on the back of stronger milk production data - and some worries highlighted by RBA governor Philip Lowe helped add to the negativity for the aussie. AUD/USD moved to a low of 0.7251 before trading just above that now.
The yen and swissie on the other hand are holding firm ahead of the next session as risk sentiment remains fragile and US equity futures continue to trade at the lows. USD/JPY held steady for the most part around 112.40-50 levels but now trades at the lows around 112.34.
Aside from currencies, Bitcoin continued its slump as cryptos were once again sold off across the board. The decline saw Bitcoin fall below $4,500 for the first time since October 2017 and is now down by more than 30% since last Wednesday.
