Forex news from the European morning session - 27 December 2018
Headlines:
- Risk sentiment takes a knock as US equity futures tumble
- ECB says significant monetary policy stimulus is still needed
- Switzerland December Credit Suisse investor sentiment -22.2 vs -42.3 prior
- PBOC says will keep prudent monetary policy
- Italy parliament reportedly to vote on budget by 29 December
- BOJ to maintain current pace of bond buying in January
- China says have made concrete plans for face-to-face meeting with US in January
- US Commerce Department won't publish economic data during shutdown
Markets:
- JPY and CHF lead, NZD lags on the day
- European equities lower; E-minis down 1.6%
- US 10-year yields down 3.7 bps to 2.770%
- Gold up 0.33% to $1,271.31
- WTI down 1.64% to $45.46
- Bitcoin down 0.63% to $3,751
Things started off with a bit of a downside tilt towards risk sentiment as Chinese industrial data disappointed and that left the aussie and kiwi pressured. The yen was also holding up well despite the Nikkei closing almost 4% higher as US equity futures remain moody in a reminder that yesterday's gains may not amount into much else.
There weren't many impactful headlines nor wild market moves as it was mainly a risk-driven session. USD/JPY started the session around 111.00 but then fell to a low of 110.73 as US equity futures tumbled with E-minis falling by more than 1.7% at one point. US Treasury yields are also marked lower and that is helping contribute to the risk off mood today. The pair has recovered slightly but still trades at the lows around the 110.80 region.
The swissie was the other main beneficiary from the risk off sentiment gaining sharply during the session and coming close to matching gains seen in the yen. A fall in oil prices as well isn't helping with energy stocks and that is only adding to the sour risk mood on the day.
Speaking of oil, the downside pressure saw oil drop by more than 2% earlier and that gave USD/CAD a lift to a high of 1.3633 before the pair settles around the 1.3600 handle ahead of North American trading.
There isn't much else of note as EUR/USD continues to be dragged close to large expiries near 1.1400 while the rest of the market continues to watch equities sentiment rather closely following the rebound in Wall Street overnight. All eyes will be on the opening bell later to find out if what occurred yesterday was merely a dead cat bounce.
