Forex news from the European trading session
Headlines:
- Bundesbank sees German economic growth picking up again in Q2
- UK May CBI trends total orders -3 vs 2 expected
- ECB's Liikanen says rates to stay low for an extended period after QE ends
- BOE's Saunders says labour market will continue to tighten
- More from Carney: There's residual softness in Q1 GDP data
- BOE's Carney says that economy did not evolve in line with February forecast
- More from Vlieghe: Raising rates earlier would have weakened recovery
- BOE's Vlieghe says likely only a small amount of slack left in the UK economy
- UK April public sector net borrowing +£6.2 bn vs +£7.1 bn expected
- BOE's Vlieghe: Interest rates will go up very gradually over the next few years
- China confirms cut to car import duty to 15%, effective 1 July
- SNB total sight deposits w.e. 18 May CHF 576.4 bn vs CHF 576.2 bn prior
- Switzerland April M3 money supply +3.3% vs +3.3% y/y prior
- BOJ Kuroda says that central banks are 'extremely cautious' on issuing digital currencies
- Japan April supermarket sales -1.2% vs -0.1% y/y prior
- EU's Dombrovskis says new Italian government must keep deficit under control
- South Korea says NK-US summit is to be held as scheduled - report
- US-China deal could include pledge to remove tariffs on US products
Markets:
- EUR and GBP lead, USD lags on the day
- European equities mostly higher
- Gold up by 0.14% to $1,294.44
- WTI up by 0.37% to $72.51
- US 10-year yields up by 1.7 bps to 3.076%
- Bitcoin down by 1.77% to $8,258
It was a session mainly dominated by headlines from central bank speakers - the BOE for the most part. The inflation report hearing dragged on for two hours, and if anything the most noticeable takeaway for me is how the Treasury committee lacked a bite this time around in going at the BOE speakers considering how wrong they have been so far this year.
Apart from that, we didn't get anything new from the hearing. Vlieghe kicked things off with his reappointment hearing and he touched on Brexit risks and how the central bank is not too worried about it. That helped sterling touch session highs on the day, with cable jumping from 1.3470 to 1.3492 on the day.
But those gains were short-lived once Carney took over and pretty much failed to offer anything new or provide any additional signal on an August rate hike. The August SONIA continues to price in a 50% chance of a rate hike in August - and that seems about right, which is basically unchanged to the probability before the hearing began earlier today.
Cable has settled back down to near 1.3460 currently, with the key takeaways from the hearing being that the central bank isn't comfortable with providing detailed rate path guidance and that they will still be data dependent moving forward.
Other than that it's been a bit of a quiet session on all other fronts with the dollar weakening being the most notable price action that is happening so far. The greenback is the weakest performing major currency on the day, with key breaks being formed in AUD/USD and NZD/USD - both pairs having possibly found a bottom.
The dollar index is down 0.3% to 93.36, a far cry after having touched a five-month high yesterday above 94.00.
Meanwhile, on the trade front China has decided to cut import duty on cars from 25% to 15% - its first change in more than a decade. And that's helping to give equities, autos in particular, a lift on the day.
