Forex news from the European trading session - 26 June 2018
Headlines:
- EU's Malmstrom says currently there are no talks between EU and US on trade
- BOE's Haskel says gradual unwinding of QE would have minimal effects
- BOE's Haskel says central bank has scope to cut rates slightly lower in case of economic downturn
- BOE's McCafferty says central bank shouldn't dally on interest rate increase
- BOE's Haskel says opportunities for adjusting bank rate to control the economy appear to be growing more
- OPEC+ monitoring committee set to meet in Baku in January - report
- UK Finance May mortgage approvals 39.24k vs 38.15k expected
- No reprieve for Chinese stocks as Shanghai Composite enters bear market
- London mayor Khan says Theresa May has Brexit priorities 'all wrong' - report
- Is China back on the yuan devaluation horse again?
- Fitch says it is too soon to call China's RRR cut 'a clear sign of easing'
- SNB's Maechler says that the franc remains 'highly valued'
Markets:
- JPY leads, NZD lags on the day
- European equities mixed, mostly higher
- Gold down 0.60% to $1,257.98
- WTI down 0.22% to $67.93
- US 10-year yields flat at 2.875%
- Bitcoin down 0.91% to $6,194
Coming off the Asian session, the market was still a little jittery with equities mostly lower but sentiment improved prior to the futures opening in Europe as the Nikkei pared losses while the Hang Seng index also managed to post a 0.2% gain at one point.
The improved sentiment led to a stronger open for both the futures and cash equity market. Ranges were still narrow in the currencies space for the most part but the dollar started to inch ahead on the day as gold touched the year's low as technical levels continue to give way.
It was very much straightforward trading thereafter as the dollar continued to hold onto gains but there was a bit of a twist for sterling as incoming BOE member John Haskel proved to be quite the dovish replacement for hawkish member Ian McCafferty.
EUR/USD started the session near the 1.1700 handle before inching lower to 1.1680 but as the dollar gained further the pair fell to a low of 1.1651 before trading just above it now. There isn't much of a catalyst for the move today as it's just general dollar demand all around.
USD/JPY traded around 109.60 to start the session as sentiment in the market improved a little, but moved up to a high of 109.80 as US equity futures also saw some gains and the dollar also inched higher. But with S&P 500 futures paring those gains now, the pair has fallen back to where it started ahead of the US session.
GBP/USD was one of the more interesting pairs in the session. It traded to a low around 1.3260 as the euro also weakened against the dollar, but then Haskel started his testimony and his initial comments showed he would have sided with the "on hold" camp if he were to be a voting member last week. That sent cable down to 1.3245 before his comment on interest rate cuts and uncertainty surrounding Brexit sent the pair down to a low of 1.3207 before bouncing back up later in the session.
Commodity currencies meanwhile remained on the back foot for the most part with USD/CAD trading back above the 1.3300 handle while AUD/USD continues to stick around the 0.7400 handle as NZD/USD trades near the lows with the dollar taking charge.
The risk-off tones are not entirely gone in the currencies space just yet, and the market remains cautious nonetheless. But there is some sense of relative calm if compared to the tones from trading yesterday and earlier in Asia.
Apart from that, the other developing story on the day has been that of the weakening Chinese yuan. With the trade rhetoric still brewing, it's certainly something to watch out for in the coming days/weeks.
