Forex news from the European morning session - 26 November 2018
Headlines:
- Trump threatens to permanently close Mexico border if necessary
- ECB's Lautenschlager says nothing on the horizon to change plans to end QE
- ECB's Praet: It's clear that downside risks have increased notably
- UK Finance October mortgage approvals 39.70k vs 38.51k prior
- ECB's Praet: Recent developments point to some loss in growth momentum
- Germany November Ifo business climate index 102.0 vs 102.3 expected
- SNB total sight deposits w.e. 23 November CHF 577.3 bn vs CHF 577.3 bn prior
- Italian official says government discussing lower budget deficit target
- A look ahead for RBNZ's financial stability report
- UK's Barclay: Tough task to get Brexit deal past parliament
- Italian bond yields fall as conciliatory tones on budget help ease investor worries
- May reported to plan parliament vote on Brexit deal on 12 December
- Ukranian ships seized by Russia said to be moored at Crimean port of Kerch
- Italy's Siri says 'a little fine-tuning' of budget is possible
Markets:
- AUD leads, JPY lags on the day
- European equities trade higher; E-minis up 1.2%
- US 10-year yields up 2.5 bps to 3.064%
- Gold up 0.15% to $1,225.08
- WTI up 1.53% to $51.19
- Bitcoin down 8.00% to $3,919
The major trading theme on the session and for the day has been that of risk. Asian equities were already buoyant for the most part and US equity futures were also trading higher early on. The notable headline in European trading was from Italy as the government appears to be more conciliatory in their discussions with the European Commission on the budget.
That helped to put a strong bid in Italian bonds which boosted European equities and kept risk riding high on the session. USD/JPY started around 113.10 and then pushed to a high of 113.36 before trading at 113.20 levels currently. The Japanese yen is the weakest performing major currency on the day as a result of the improved risk tone in markets.
As Italy's budget situation gathers optimism, it also helped to keep the euro bid. EUR/USD started the session around 1.1340 and pushed to a high of 1.1384 as Italian bond yields fell. The pair now trades at 1.1360 levels as markets calm down a little following the earlier move.
GBP/USD didn't see much action as there hasn't been much fresh Brexit developments following the summit yesterday. The pair started the session around 1.2810-20 before climbing to 1.2840 as the dollar slipped. The pound held steady and caught some bids later on to move to 1.2859 and remains near there ahead of US trading.
Meanwhile, commodity currencies are the biggest winners in trading so far. The loonie is benefiting from the slight rebound in oil prices today with USD/CAD hovering around 1.3200 earlier before touching a low of 1.3187. The pair now trades just above the 1.3200 handle now as we await North American traders to join in the fray.
The aussie is the biggest gainer in all of this with AUD/USD rising from 0.7250 to 0.7276 in the session before retracing those gains to move back to 0.7250 levels currently.
Looking at the session ahead, it's going to still be all about the ebb and flow with risk in the driver's seat. Let's see if Wall St can keep up with the good mood shown so far today.
