Forex news from the European morning session - 21 February 2020
Headlines:
- UK February flash services PMI 53.3 vs 53.4 expected
- Eurozone February flash manufacturing PMI 49.1 vs 47.4 expected
- Germany's manufacturing PMI jump in February flatters to deceive
- Germany February flash manufacturing PMI 47.8 vs 44.8 expected
- France February flash manufacturing PMI 49.7 vs 50.7 expected
- South Korea confirms another 48 new coronavirus cases, brings total to 204 cases
- BOJ's Kuroda: No review of policy framework is needed now
Markets:
- GBP leads, NZD lags on the day
- European equities mildly lower; E-minis down 0.3%
- US 10-year yields down 2.7 bps to 1.488%
- Gold up 1.0% to $1,635.60
- WTI down 1.9% to $52.86
- Bitcoin up 1.0% to $9,707
The highly-anticipated PMI readings in Europe ended up being a bit of a disappointment as a lack of pizzazz saw a muted reaction from the market in the session today.
The risk mood was erring on the softer side as risk aversion crept back in amid coronavirus fears but euro area PMI readings showed some mixed sentiment - with the headline being better although the details do point towards supply chain disruptions.
It was a case of the market having to look at the glass as being half-full or half-empty and there was neither reaction in the end. EUR/USD rose from 1.0800 to 1.0820 on the better headlines but is settling back to 1.0800-10 currently.
Meanwhile, UK PMI also lacked an oomph as it reaffirmed some steadiness in the UK economy ahead of post-Brexit trade negotiations in the coming weeks. The pound kept steady around 1.2920-30 before pushing higher now to 1.2940 levels.
As the risk mood stays soft, the aussie and kiwi continue to stay pressured in trading this week. Meanwhile, the yen went in search for normality momentarily as the currency gained on weaker yields with USD/JPY falling to 111.50 before recovering to 111.80 levels now.
Gold remains a standout performer as the technical break stays the course as it is up by 1% on the day to $1,635 levels.
Looking ahead, it is going to be all about risk ahead of the weekend and whether or not Wall Street can turn things around. Or it could be a case of another risk averse Friday.
