Forex news from the European morning session - 23 November 2018
Headlines:
- Italy's Salvini says he would ask 'respect' from Juncker
- Spain is adding yet another headache for Theresa May ahead of Sunday's summit
- Euro-sherpas said to fail to reach a deal over Gibraltar
- Eurozone November preliminary manufacturing PMI 51.5 vs 52.0 expected
- Germany November preliminary manufacturing PMI 51.6 vs 52.2 expected
- France November preliminary manufacturing PMI 50.7 vs 51.2 expected
- Raab says that parliament will vote May's Brexit deal down
- Germany Q3 final GDP -0.2% vs -0.2% q/q prelim
- Italy's Di Maio: Urges dialogue with the EU, not 'war'
Markets:
- JPY leads, NZD lags on the day
- European equities mixed, paring earlier gains; E-minis down 0.5%
- US 10-year yields down 1.5 bps to 3.048%
- Gold down 0.34% to $1,223.30
- WTI down 4.52% to $52.17
- Bitcoin down 4% to $4,251
A couple of market themes are at play today but the notable mover on the session has been the decline in the euro after economic data fueled concerns over Germany's potential growth rebound in Q4.
EUR/USD started the session around 1.1400-10 before the release there sent the pair down to 1.1370. Eventually, the pair fell to a low of 1.1338 as the dollar caught a bid alongside the yen as markets turn a little bit more risk averse, before tracking back to 1.1350 levels currently.
That leads us to the other notable theme in markets today and that is of a more cautious risk tone. Chinese equities and oil prices were the notable decliners early on, down by about 2% respectively. E-minis were down about 0.5% and that helped the yen gain a little with USD/JPY moving towards 113.80 from 113.90 levels earlier.
But risk recovered a little when European markets opened and the euro's decline helped to give European equities a lift as well following the lackluster German data. However, commodity prices and the yen barely reacted and the optimism was short-lived.
A sudden wave of risk aversion hit when oil prices sank to its lowest level in more than a year, declining by more than 5% at one point. E-minis were then dragged back down by about 0.4% from being flat earlier on and precious metals also fell, helping the dollar catch a bid. USD/JPY moved to a low of 112.78 on that and trades around 112.80 currently.
The deteriorating risk sentiment saw USD/CAD rise from 1.3210 to a high of 1.3241 before settling around 1.3220 levels currently. Meanwhile, AUD/USD was also brought lower from 0.7240 to a low of 0.7220 where it trades just above currently.
The final overarching theme in markets today is that of Brexit. All of the focus is on Sunday's summit and according to reports, the fishing issue has been resolved leaving only the Spain-Gibraltar issue standing in the way of a unanimous agreement. Cable was already trading tepidly around 1.2850 before falling alongside the euro to 1.2820 levels. Then, European representatives were said to disagree on a settlement and that brought the pound to lows for the day of 1.2804 against the dollar. Price has recovered a little and now trades around 1.2820 levels ahead of US trading.
