Forex news from the European morning session - 24 July 2019
Headlines:
- US MBA mortgage applications w.e. 19 July -1.9% vs -1.1% prior
- China reportedly gives the go-ahead for US soybean purchases as goodwill
- European Parliament reiterates that backstop is necessary for an orderly Brexit
- BOJ reportedly divided on need to ease monetary policy next week
- Dominic Cummings set to be named as senior adviser to Boris Johnson
- Eurozone July flash manufacturing PMI 46.4 vs 47.7 expected
- Germany July flash manufacturing PMI 43.1 vs 45.2 expected
- UK's Hancock says that next election is "a long way off"
- France July flash manufacturing PMI 50.0 vs 51.6 expected
Markets:
- GBP leads, AUD lags on the day
- European equities mixed; E-minis down 0.3%
- US 10-year yields down 2.3 bps to 2.058%
- Gold up 0.6% to $1,426.30
- WTI up 0.5% to $57.03
- Bitcoin down 4.5% to $9,688
It was a session with a little bit of everything but the notable mover in the currencies space is the pound as we see EUR/GBP slump to a one-month low, helping to lift the pound higher across the board on short covering action.
The move came after euro area PMI data disappointed with Germany's manufacturing recession seen deepening, recording its weakest print in almost 7 years. EUR/USD slipped to a low of 1.1127 from 1.1155 before the pair recovered a little on the day to near 1.1150 now.
As euro area economic data is seen weakening further in July, the yen gathered some strength as bond yields in Europe and the US fell. German and French yields hit two-week lows while 10-year Treasury yields slipped by nearly 3 bps at one point, prompting USD/JPY to fall from 108.15 to 108.00 - where $4.3 billion worth of expiries are rolling off today.
After that was over and done with, the pound hogged the spotlight with cable steadily inching higher from 1.2440 to 1.2485 before cracking past key near-term resistance to break above the 1.2500 handle. At the same time, EUR/GBP was brought to one-month lows from 0.8950 to where it now trades around 0.8915.
Meanwhile, the dollar was steady for the most part against the rest of the major bloc with little changes across the board. The aussie is the notable laggard though following softer PMI data in Asia Pacific trading and after Westpac called for an earlier rate cut by the RBA.
Looking ahead, the anticipation now shifts towards the ECB meeting decision tomorrow and as already seen, it doesn't just pertain to the euro as it will also affect expectations ahead of the BOJ meeting next week. It's a race to the bottom now for global central banks and nobody wants to be the one to get left behind.
