Forex news from the European morning session - 28 March 2019
Headlines:
- ECB's Nowotny says would make sense to lessen negative rate impact
- Eurozone March final consumer confidence -7.2 vs -7.2 prelim
- Saxony March CPI +0.5% vs +0.3% m/m prior
- Spain March preliminary CPI +0.4% vs +0.6% m/m expected
- Chinese premier Li says economic performance in March exceeding expectations
- DUP's Foster: Abstention was never an option
- UK's Letwin: Indicative vote process has not yet failed
- Brexit: Government, DUP talks said to continue today but no breakthrough expected
- Praet says that ECB needs a solid monetary policy case for tiered rates
Markets:
- JPY leads, GBP lags on the day
- European equities mixed; E-minis flat
- US 10-year yields flat at 2.365%
- Gold down 0.3% to $1,305.81
- WTI down 1.3% to $58.64
- Bitcoin flat at $4,006
Markets were generally calm on the session as bond yields recovered from their lows earlier in the day as risk sentiment hits the reset button ahead of North American trading. But the pound was the main mover as it fell further as May's bid to get her deal past the finish line failed and parliament couldn't agree on an alternative majority through indicative votes.
Cable began the morning around 1.3180-90 but quickly took a fall towards 1.3140 as support for a third meaningful vote continues to be lackluster as the DUP is still not seen changing their stance. The dollar was also trading steadily and that added to downside pressures on cable.
And as we move closer towards midday in London, the pound remains under pressure with cable falling inching closer towards the 1.3100 handle. With nothing to break the current Brexit deadlock, a no-deal outcome on 12 April is still not off the table just yet.
Treasury yields were under pressure in the early morning with 10-year yields down by about 2 bps and that saw USD/JPY fall to a low of 110.02. However, sentiment recovered with yields rising and equities paring losses and that helped USD/JPY rise to 110.40 before tracking to 110.20 levels now as risk tones are more or less flat ahead of US trading.
With the greenback holding its ground, EUR/USD traded rather rangebound between 1.1240-60 before facing a bit of a dip late on to near 1.1230 currently. The fact that the key gauge of Eurozone long-term inflation expectations dipped to its lowest level since September 2016 certainly isn't helping the single currency.
Meanwhile, the aussie and kiwi saw their gains erased against the dollar after having held higher for majority of the European morning. AUD/USD traded around 0.7090-00 but large expiries continue to keep the pair in-check before dipping a little in the past hour.
