Forex news from the European morning session - 27 March 2019
Headlines:
- DUP says will support Malthouse compromise plan A in indicative votes later
- US MBA mortgage applications w.e. 22 March +8.9% vs +1.6% prior
- Brexit: Indicative votes, what options are on the table?
- 2-year Treasury yields hit thirteen month low as global bond yields continue to slump
- Brexit: Rees-Mogg says long delay would be a precursor to Article 50 revocation
- ECB's Draghi: Risks to the outlook remain tilted to the downside
- Japan reiterates commitment towards plan to raise sales tax in October
- Why collapsing bonds may signal gains in stocks
- What are markets pricing in for the RBNZ now?
Markets:
- JPY leads, NZD lags on the day
- European equities lower; E-minis down 0.2%
- US 10-year yields down 3.9 bps to 2.384%
- Gold up 0.1% to $1,316.95
- WTI down 0.5% to $59.65
- Bitcoin up 2.9% to $4,026
Markets were mostly mixed earlier in the session as equities posted mild gains at the start of the European morning but bond yields were under pressure. Germany's 10-year bund yields fell to fresh 2½ year lows and that saw EUR/USD slip to a low of 1.1247 before Draghi's slightly more optimistic speech helped the single currency recover to 1.1270 against the dollar.
As the session trudged along, bonds continued to rally and that saw a shift in risk sentiment which prompted currencies to finally wake up from their lull. 10-year Treasury yields dipped by nearly 7 bps to hit a low of 2.35% and that saw USD/JPY fall from 110.60 to a low of 110.24 before some slight recovery in the past hour or so.
The franc was another beneficiary of the deterioration in risk sentiment as EUR/CHF fell to a its lowest level since July 2017 before moving just above the 1.1200 handle currently, with European equities now trading in the red.
The pound was a notable gainer late in the morning as well with the UK parliament gearing towards indicative votes later today. Cable began the morning lower at 1.3170 but slowly moved up to trade near the highs now around 1.3220 levels.
Speaker John Bercow will have 16 options to select from to put in the ballot paper before parliament has to narrow it down in the coming days as May continues to seek an opportunity to sneak in a third meaningful vote in the interim.
The aussie and kiwi remain pressured after the RBNZ moved to a more dovish stance in Asia Pacific trading, with the former now slipping to session lows after hovering around 0.7100 against the dollar for the most part. Meanwhile, NZD/USD is back to hugging the 0.6800 handle where it began the European morning with markets having fully priced in a rate cut from the RBNZ by November 2019 from June 2020 before the meeting today.
