Forex news from the European morning session - 28 November 2018
Headlines:
- US MBA mortgage applications w.e. 23 November +5.5% vs -0.1% prior
- UK government says that May's Brexit plan reduces GDP by 2.1% to 3.9% in 15 years' time
- Trump reportedly willing to allow government shutdown over border wall
- China president Xi says will sharply widen market access for foreign investors
- Italy's Di Maio says that government cannot betray promises to citizens
- Eurozone October M3 money supply +3.9% vs +3.5% y/y expected
- Switzerland November Credit Suisse investor sentiment -42.3 vs -39.1 prior
- Germany December GfK consumer confidence 10.4 vs 10.5 expected
- Italy's budget deficit target reportedly must be closer to 2% for EU to consider approval
- European Commission reported to open deficit procedures against Italy before Christmas
Markets:
- GBP leads, CAD lags on the day
- European equities mixed; E-minis up 0.2%
- US 10-year yields down 0.7 bps to 3.050%
- Gold down 0.04% to $1,214.56
- WTI down 0.27% to $51.42
- Bitcoin up 6.01% to $3,994
It was a quiet session for the most part with headlines failing to trigger much response in markets overall. That's not too surprising with markets keeping a watchful eye on Fed chair Powell's speech to come at 1700 GMT.
Major currencies traded in a narrow range for the most part as risk sentiment isn't lending much help either despite positive vibes in Asian equities early on. The more positive sentiment in Asian trading saw the aussie and kiwi hold decent gains with AUD/USD holding up at 0.7230-40 for majority of the session and NZD/USD at 0.6790-00 levels throughout. However, the fact that both pairs only trade in a 20 pips and 23 pips range so far today highlights the lackluster mood in the currencies space.
Meanwhile, Italy's budget headlines continue to show that a stalemate is still seen between the country's government and the European Commission. The commission is also reportedly looking to launch EDP measures against Italy before Christmas. The slight negative tones there pulled the euro lower from 1.1290 levels to a low of 1.1267 early on before recovering to 1.1280 levels currently.
The significant mover on the session has been the pound as it recovers some poise following yesterday's losses. Brexit headlines have been few and far between once again with all the focus still on Theresa May's chances on winning a meaningful vote in parliament. Cable started the session around 1.2740 before racing to highs of 1.2775 and then now extending gains towards 1.2800 ahead of US trading.
The loonie is the major laggard so far on the day in a follow through move from yesterday's trading. Oil prices were up by almost 1.5% early on but that failed to provide much reprieve for the currency as USD/CAD raced to a high of 1.3332 from about 1.3310 earlier. With oil giving back those gains, the pair remains underpinned trading near 1.3320 currently.
No prizes for guessing what the main event for the session ahead will be. It's all about Powell so make sure to keep your eyes and ears peeled when the time comes.
