Forex news from the European trading session - 24 August 2018
Headlines:
- Fitch Ratings says negligible impact from Australia on leadership change
- UK Finance July mortgage approvals 39.58k vs 40.54k prior
- China says that good outcome for trade talks requires earnest work
- UK's Lidington: No-deal Brexit is not a desirable objective
- Australia's new PM Morrison says not planning election any time soon
- China says that it will keep retaliating if US keeps imposing "unreasonable" trade measures
- Germany Q2 final GDP +0.5% vs +0.5% q/q prelim
- Former US official says US-China trade deadlock is set to continue
- Italy's Salvini reiterates that could clash with EU on budget law
Markets:
- AUD leads, JPY lags behind
- European equities higher on the day
- Gold up 0.49% to $1,191.39
- WTI up 1.30% to $68.71
- US 10-year yields up 0.9 bps to 2.835%
- Bitcoin up 1.85% to $6,537
The trading day was mostly steady as markets were very much caught in a lull ahead of Powell's speech in Jackson Hole. The dollar was mixed against most currencies but there wasn't any notable changes in the session to that of Asian trading. But much like yesterday, there seems to be certain orders being executed during thin trading before US markets and the dollar and yen moved lower as a result while the euro, swissie, pound, and loonie were the main beneficiaries.
There were no specific headlines to have caused the move but thin markets plus large flows mean things do move quite a bit and that is what we saw during the last hour of the session. Meanwhile, equities continue to move higher and that is adding further pressure to the yen on the day.
Looking at individual currencies, the aussie is the leader on the day as Scott Morrison was voted as prime minister to replace the ousted Malcolm Turnbull. That caused a relief spike in AUD/USD and the pair traded around 0.7270-80 levels thereafter. But with the dollar moving lower in the last hour we're seeing the pair push towards session highs again threatening a break of the 200-hour MA and the 0.7300 handle.
EUR/USD had a more subdued trading day ranging between 1.1550 to 1.1575 for the most part before breaking higher catching a bid against the greenback with EUR/JPY also moving higher as both pairs push towards session highs on the day currently.
USD/JPY once again has had a very subdued trading session ranging between 111.25-40 for the most part as both the dollar and the yen remain weak throughout the day. As equities move higher, the yen is feeling a bit of the heat alongside the broadly weaker greenback.
GBP/USD saw quite a bit of action on the day as the pound seems to be the currency that started the move. The pair traded to a high of close to 1.2840 early on in the session before moving lower towards the 1.2820 levels. Thereafter, bids in GBP/JPY helped to push the pair towards a high of 1.2850 on the session before moving to trade near the highs of 1.2860 currently.
USD/CAD also had a quiet day initially trading rather unchanged even as oil prices moved higher. The pair ranged around 1.3070-80 levels for the most part before moving lower as the dollar and yen weakened across the board to trade near the lows now.
All eyes turn to Powell's speech in Jackson Hole. While the market will be looking for clues, I'm not going to hold my breath as I don't expect Powell to deliver anything substantial to reaffirm the Fed's rate hike cycle.
