Forex news from the European trading session - 25 June 2018
Headlines:
- German govt spokesman says Merkel continues to seek solution on immigration in talks with EU
- ECB's Vasiliauskas says could think about further policy steps in autumn of 2019
- Ifo economist says economic boom in Germany is over
- Germany June Ifo business climate index 101.8 vs 101.8 expected
- SNB total sight deposits w.e. 22 June CHF 576.7 bn vs CHF 576.5 bn prior
- Bank of France's Goulard says US has deficit risk from Trump's pro-cyclical policies
- Japan April final leading indicator index 106.2 vs 105.6 prelim
- Japan's Abe says will keep requesting exemptions on US tariffs
- China says they agree with EU to resolutely oppose trade protectionism
Markets:
- JPY leads, CAD lags on the day
- European equities lower
- Gold down 0.19% to $1,267.02
- WTI down 0.09% to $68.52
- US 10-year yields down 1.8 bps to 2.876%
- Bitcoin up 2.06% to $6,196
It was a quiet session for the most part but with an overriding theme at play, and that is the risk-off sentiment that started in Asian trading. Weekend news saw the trade rhetoric escalate and the market reacted in kind with equities seeing red and then extending losses thereafter, while bonds stay bid and the Japanese yen and the US dollar gaining ground.
European equities started the session on a softer tone, down about 0.6% to 0.7% across the board but those losses have now mounted to 1.5% for the DAX and Italy's MIB. However, the currencies market saw a bit more calm throughout.
USD/JPY traded between 109.40 to 109.50 levels the entire session, after making its way lower in Asian trading earlier.
EUR/USD started the session around 1.1650 before making a move lower towards a test of the 200-hour MA @ 1.1630. The low posted was 1.1629 before a bounce higher took the pair up to near the day's highs again (despite sluggish German data) - but the pair ultimately settled near unchanged levels as the session calmed down.
Cable saw a bit of action trading lower alongside the euro but unlike the single currency, sterling failed to mount a recovery and traded around 1.3230 to 1.3240 levels for the most part after a drop to 1.3221 earlier. There wasn't any news of note to have impact sterling today with sentiment against the dollar largely driving the mood.
Commodity currencies meanwhile are lower across the board with the aussie and loonie hugging the bottom of the pile. No surprises given that we're in risk-off trading, but of note USD/CAD is looking to stretch its wings again above the 1.3300 after an earlier attempt failed.
Apart from that, Turkey's election results saw Erdogan come out on top again with the opposition leader conceding defeat. The lira posted gains of up to 3% against the dollar early on, but at the end of the day market sentiment trumped the post-election euphoria and the lira pared all gains as we head into US trading.
This will be the final trading week for June, so while risk-off tones are at play now do be aware that portfolio rebalancing/adjustments are very much on the cards too with it being month-end, quarter-end, and the half-year close.
