Forex news from the European morning session - 28 February 2019
Headlines:
- Fitch: China's domestic slowdown is what is driving global trade slump
- Italy February preliminary CPI +0.2% vs +0.2% m/m expected
- India says it will not negotiate with Pakistan for release of captured pilot
- BOJ announces tweak to bond-buying operations in March
- Saxony February CPI +0.3% vs -1.0% m/m prior
- Spain February preliminary CPI +0.2% vs +0.3% m/m expected
- France February preliminary CPI 0.0% vs vs +0.4% m/m expected
- Trump says thought it wasn't a good time to be signing anything
- Switzerland Q4 GDP +0.2% vs +0.4% q/q expected
- Trump-Kim summit ends without a joint public statement
- Trump-Kim working lunch session said to have been cancelled
Markets:
- CHF leads, CAD lags on the day
- European equities mixed; E-minis down 0.3%
- US 10-year yields down 1.8 bps to 2.664%
- Gold up 0.5% to $1,326.52
- WTI down 0.2% to $56.84
- Bitcoin up 2.0% to $3,824
The Swiss franc is the currency that is stealing the spotlight in the European morning as it gained on the back of a more risk averse tone in markets since Asian trading.
US-China trade talks were already called into question following Lighthizer's comments overnight and a further slump in Chinese PMI data failed to inspire investors on the day. Ongoing tensions between India and Pakistan only adds to the gloomy mood, and the fact that the Trump-Kim summit failed to reach an agreement was the cherry on top.
USD/JPY initially fell from 110.85-90 to a low of 110.70 as the Trump-Kim news hit before slipping further to 110.66 and then recovering to trade between 110.70-80 thereafter.
But it was the swissie that benefited the most (you can attribute it to plenty of reasons, including Japan's proximity alert to North Korea) as USD/CHF fell from 0.9980 in early trades to now hit lows near 0.9930. The pair also falls below its 100-day moving average as sellers continue to exert more control.
The euro was the other decent mover on the session as the single currency breaks above the 1.1400 handle and touches a three-week high against the dollar. Inflation figures in the region show a slight rebound for February, which increases the odds of the ECB not revising its forward guidance at next week's meeting.
Apart from that, other major currencies are still trading more narrowly with cable pivoting around the 1.3300 handle for the most part. European equities recovered from early losses to be mixed on the day but sentiment is still rather poor in US equity futures.
Looking ahead, the US Q4 GDP report will be the next key event that markets will focus on so keep your eyes on that as it will determine dollar sentiment in North American trading later.
