Forex news from the European morning session - 28 January 2019
Headlines:
- US says WTO ruling on China tariffs are 'pointless'
- UK PM spokesman says government won't comment on amendments until after speaker chooses
- EU reiterates that Brexit withdrawal agreement is not open for renegotiation
- Brexit amendments, what are they all about?
- Eurozone December M3 money supply +4.1% vs +3.8% y/y expected
- SNB total sight deposits w.e. 25 January CHF 576.7 bn vs CHF 576.3 bn prior
- PBOC approves S&P Global to enter China's credit rating market
Markets:
- CHF leads, GBP lags on the day
- European equities lower; E-minis down 0.4%
- US 10-year yields flat at 2.760%
- Gold down 0.2% to $1,300.27
- WTI down 1.7% to $52.79
- Bitcoin down 4.2% to $3,410
As we began the session, the kiwi and aussie carried decent gains from Asian trading as they were boosted by a stronger Chinese yuan from the PBOC fix. But as risk began turning around in late Asian trading, the greenback steadied itself and we saw both commodity/risk currencies pare gains ahead of US trading.
NZD/USD started around 0.6860 levels before slowly slipping to flat levels now near 0.6840. Meanwhile, AUD/USD fell from 0.7190 to trade near the lows for the day close to 0.7170 currently. It was a similar case for USD/CAD as the pair started to catch up to lower oil prices on the day moving from 1.3210 to being close to 1.3240 now, with oil slipping by nearly 2%.
The pound had another volatile session as traders brace themselves for the voting on amendments that will take place at the Commons tomorrow. The quid was the best performing major currency last week but with uncertainty looming, some money has been taken off for the time being. Cable moved from 1.3190 to 1.3150 before recovering back to 1.3180 mid-way through the European morning, but with the dollar holding its own the pair fell back to 1.3140 levels currently.
USD/JPY saw mostly subdued price action as the pair stuck around 109.30-40 levels for the most part. As the greenback pushed higher, buyers attempted to get above 109.50 but with Caterpillar earnings disappointing and dragging US futures lower it is causing tepid tones with equities sentiment souring but Treasuries holding flat for the time being.
Meanwhile, EUR/USD traded in a confined manner between 1.1400-20 for the most part as expiries near 1.1400-15 are helping to keep price action limited with little on the data docket to shake things up.
Looking ahead, it'll be all about risk and dollar sentiment today as markets prepare for a potentially volatile period with the Brexit amendment vote, Fed meeting, tech earnings (including Apple, Facebook, Amazon), US-China trade talks, Chinese PMI data, and US non-farm payrolls all still on the agenda for the rest of the week.
