Forex news from the European trading session - 25 May 2018
Headlines:
- ECB's Liikanen says ECB will take policy decisions based on latest data
- Saudi energy minister says oil demand will pick up in 2H 2018
- Ciudadanos says willing to back no-confidence vote against Rajoy
- Saudi energy minister says certainly prepared to adjust policy in June
- Spanish opposition put forward motion of no-confidence against PM Rajoy
- UK Finance April mortgage approvals 38.05k vs 37.40k expected
- UK Q1 GDP second reading +0.1% vs +0.1% q/q prelim
- Germany May Ifo business climate index 102.2 vs 102.0 expected
- Lira finds some relief as CBRT plans to fix loan FX rate
- OPEC, non-OPEC members said to have discussed increasing oil output by 1 mln bpd
- Iran is said to want EU to compensate for US withdrawal from nuclear deal
- UK's Hammond says that EU and UK are having constructive discussions on Brexit
- IMF's Lagarde says that Turkey is under pressure from markets
Markets:
- AUD leads, CAD lags on the day
- European equities mostly higher, IBEX and MIB weighed down by politics
- Gold is up by 0.08% to $1,305.60
- WTI is down by 1.81% to $69.43
- US 10-year yields is down by 1.8 bps to 2.958%
- Bitcoin is down by 1.68% to $7,425
The session started with focus on yen pairs being lower, as the market digested the cancellation of the US-North Korea summit. But with North Korea expressing some willingness to talk, it's helped ease jitters as we headed into the European session. Nonetheless, the market shouldn't be all too worried about the whole debacle as the US and North Korea both have a lot at stake here.
The dollar started the session on the front foot, but gains were kept to a minimum with the dollar index still struggling to break above the 94.00 handle. That saw EUR/USD range between 1.1700 to 1.1720 for most of the session. GBP/USD also ranged between 1.3340 to 1.3360 levels for the most part with the second reading of the Q1 GDP report providing little revision of note.
But the dollar weakened thereafter allowing cable to rise to 1.3370 levels with the AUD/USD and NZD/USD also joining suit moving off the lows. But as we close out the session the dollar maintained its composure and is up against all currencies except the aussie currently.
USD/JPY was once again a dud in the session, trading between 109.40 to 109.60, failing to break up or down with yields tepid and the market still making up its mind on risk sentiment.
The key news during the session was that Saudi's energy minister and Russia confirming that we'll see a reduction in the output cuts in the current OPEC+ agreement during next month's meeting in Vienna. The earlier rumour by Reuters already helped to pin oil prices down, but once confirmed by Saudi's Khalid Al-Falih oil prices tumbled with Brent falling by more than 2% and WTI falling further under $70.
And the fall in oil prices is what is helping to keep the CAD as the weakest currency on the day so far, with USD/CAD trading near session highs currently as we head into US trading.
