Forex news from the European morning session - 21 February 2019
Headlines:
- China said to propose purchasing $30 billion more in US agricultural products
- ECB minutes: Near-term growth momentum likely to be weaker than earlier expected
- Fed's Bullard: Message is rate normalisation is coming to an end
- Brexit formal text may be agreed in mid-March - report
- PBOC says will maintain prudent monetary policy
- UK government source: It does not feel like we will have a Brexit deal by next week
- Commons to debate Brexit motion on 27 February
- ECB's Nowonty: There's a debate if policy normalisation should go on
- Two senior Tory lawmakers reported to be ready to resign if May fails to change Brexit direction
- Eurozone February flash manufacturing PMI 49.2 vs 50.3 expected
- Germany February flash manufacturing PMI 47.6 vs 49.8 expected
- France February flash manufacturing PMI 51.4 vs 51.0 expected
- China's foreign ministry: No information about any ban on coal imports
- May told to delay Brexit if there's no deal, or face a revolt next week - report
- PBOC reportedly said to be likely to make further RRR cuts to spur credit
- China's Dalian port bans Australia coal imports - report
Markets:
- GBP leads, AUD lags on the day
- European equities mixed; E-minis down 0.1%
- US 10-year yields up 2.5 bps to 2.67%
- Gold down 0.2% to $1,335.45
- WTI flat at $57.18
- Bitcoin down 0.5% to $3,895
The session started off with the aussie stealing the spotlight after China's customs is reported to have banned Australia coal imports at its Dalian port. Diplomatic relations between the two have been struggling since last year and this is yet another escalation point in that.
AUD/USD moved sharply lower from 0.7160 to a low of 0.7086 on the news as stops were triggered ahead of European trading. China's foreign ministry then played coy by saying that they have no information on the matter and it helped AUD/USD recover a little to 0.7120 levels before price slipped back to hover around 0.7090-10 levels thereafter.
Looking at the situation, it is likely that there is some truth to the report but for now China isn't going to stick its neck out and comment on it from an official capacity.
As we began the European trading, the dollar held steady for the most part in trading but fell slightly after when French PMI readings came in better-than-expected. EUR/USD bounced from 1.1340 to a high of 1.1363 before those gains were tempered with as German PMI readings showed a mixed picture.
Manufacturing activity slumped heavily, dragging the overall Eurozone print into contraction territory and that saw EUR/USD fall back to the 1.1330-40 range in the aftermath. But as the morning comes to a close, the pair is picking up some momentum again moving back up to 1.1350 levels currently.
The pound was the other notable mover dragged around by headlines with cable initially holding steady around 1.3060-80 before falling to 1.3030 after a Reuters report claimed that there won't be a Brexit deal seen next week. That tempered with optimism from overnight trading but as mentioned then, May's game plan is largely unaffected by this.
Cable bounced back to 1.3050 before another Reuters report came out to say that a formal text to changes on the political declaration could come about by mid-March and be approved during the EU Summit on 21-22 March. That lifted the pound back up to the highs with cable trading back at 1.3080 levels currently.
With the aussie underperforming, that has also dragged the kiwi lower on the day with NZD/USD trading around 0.6810-30 for the most part today. Risk assets are very much subdued with US equity futures trading around flat levels ahead of North American trading with investors looking towards trade talks in Washington for more clues.
