Forex news from the European morning session - 25 February 2019
Headlines:
- Brexit: May and Juncker said to have made 'good progress' on political declaration tweaks
- Brexit: Juncker says "had a good meeting" with Theresa May
- Rutte: Not optimistic about May and Juncker finding a new way of handling backstop
- Fed's Bostic sees one rate hike this year and one more in 2020 - report
- BOE's Carney: Biggest risk for financial stability would be a no-deal Brexit
- China says trade negotiations with US have achieved 'concrete progress'
- May said to reiterate belief that extending Brexit doesn't solve impasse
- China says structural deleveraging has reached its target
- Chinese stocks rally strongly as US-China trade optimism boosts sentiment
Markets:
- NZD leads, JPY lags on the day
- European equities mixed, mostly higher; E-minis up 0.4%
- US 10-year yields up 2 bps to 2.672%
- Gold up 0.1% to $1,330.11
- WTI down 1.3% to $56.50
- Bitcoin down 3.7% to $3,798
Markets are in a bit more of an upbeat mood after Trump called for the postponement of tariffs and that led to fresh optimism surrounding trade talks between US and China. Chinese equities rallied strongly and the positive tone is lending itself to European trading so far today.
As a result, the aussie and kiwi were the main beneficiaries with the dollar and yen on the losing end among the major currencies bloc. That theme prevailed throughout as risk appetite continues to remain favourable ahead of North American trading.
AUD/USD began the session around 0.7150 before pushing higher to 0.7180 and is trading just under there now. NZD/USD saw similar price action moving up from 0.6870 to near the 0.6900 handle currently.
EUR/USD held steady trading around 1.1340-70 on the day as the dollar remains weak. Sterling also stayed relatively upbeat as Brexit headlines took up majority of the headlines in the European morning, with talks of a Brexit extension gaining significant traction. Cable traded around 1.3070-00 for the most part but the 1.3100 handle remains a tough area for buyers to crack through at the moment.
USD/CAD was more mixed as the pair traded to lows of 1.3113 on the session earlier before recovering to 1.3120 levels. But a slightly delayed reaction in oil to Trump's tweet on "high oil prices" is enough to pin down oil and the loonie for the moment with USD/CAD back at flast levels around 1.3135 now. Of note, the 100-day moving average in WTI is still playing a part in keeping gains in-check.
Looking ahead, there's little on the US economic calendar to really shake things out but there is the Chicago Fed index and wholesale inventories to move things along. Trading will still center around the ebb and flow so be aware of whether we see an extension or reversal in the positive risk sentiment so far.
