Forex news from the European trading session - 27 June 2018
Headlines:
- BOE's Carney says global risks are material and increasing
- UK June CBI retailing reported sales 32 vs 10 expected
- BOE says Brexit is the main domestic risk to financial stability
- Eurozone May M3 money supply +4.0% vs +3.8% y/y expected
- Italy June consumer confidence 116.2 vs 113.3 expected
- Switzerland June Credit Suisse investor sentiment 8.0 vs 28.0 prior
- France June consumer confidence 97 vs 100 expected
- Things are getting uglier for Chinese equities on the day
- Germany's CSU lawmaker says have to wait until end of EU summit for next course of action
- UK June Nationwide house price index +0.5% vs +0.2% m/m expected
- Germany's SPD says there is a very tense situation in the coalition
Markets:
- JPY leads, NZD lags on the day
- European equities mixed, recovers from lows
- Gold down 0.03% to $1,258.61
- WTI up 0.88% to $71.15
- US 10-year yields down 3 bps to 2.847%
- Bitcoin down 0.92% to $6,125
The session started off with subdued ranges for most major currencies apart from the NZD. The kiwi was dragged lower on poor data but also key technical levels were breached and continued to hug the lows throughout the session.
Asian equities were a little lower towards the end of the day but things picked up as Chinese equities were routed once again with the CSI 300 index entering into a bear market by the end of trading today - following the Shanghai Composite yesterday.
The market was still relatively calm with narrow ranges throughout even so but soon picked up on the negativity with USD/JPY falling to 109.70 levels from the 109.90-00 levels it was hugging prior to that.
European equities also turned negative on the day and Treasury yields fell in tandem too. And those risk-off tones extended further during the session before easing a little as we head into US trading.
There are mixed tones now in trading for European stocks with the DAX, CAC 40 and UK's FTSE all a little higher on the day while the IBEX and Italy's FTSE trading lower. S&P 500 futures are also 0.3% lower on the day now after having traded by 0.8% lower at one point earlier.
Looking at individual currency pairs, EUR/USD started the day trading around 1.1640-50 levels before making a move below the 100-hour MA. With layers of option expiries lined up between 1.1600 and 1.1690, it's making for a lot of push and pull in the pair as the lows hit 1.1622 before climbing back a little now.
GBP/USD meanwhile traded around 1.3210-20 levels to start the session before making its way lower as the euro fell. The pair tracked below the 1.3200 handle monetarily but found support to stay above it and trades near the handle as we move into US trading later.
As for commodity currencies, USD/CAD traded in a narrow range of 30 pips so far today with the 1.3300 handle providing good support as the pair traded mostly around 1.3310-20 levels so far today. A similarly subdued range can be observed in AUD/USD as well with the pair trading in a 36 pips range hugging between 0.7370 and 0.7390.
So, the market started with a focus on China and trade tensions which caused some uneasiness and nervousness resulting in slight risk-off flows but we're starting to see calm heads prevail moving into US trading.
S&P 500 futures are still lower, so risk sentiment hasn't fully recovered just yet but the fact that we're off the lows is an encouraging sign for further improvement in the session ahead. Look out for those trade headlines though. All it takes is one bad apple to spoil the whole bunch.
