Forex news from the European morning session - 29 May 2019
Headlines:
- European Commission reportedly has sent a letter to Italy on violation of debt-reduction rules
- China is said to mull qualitative change to its countermeasures against US
- Pompeo: US may or may not get a trade deal with China
- China president Xi: External uncertainties are rising
- US MBA mortgage applications w.e. 24 May -3.3% vs +2.4% prior
- ECB's Rehn: First rise in interest rates is now further away than it was a few months ago
- ECB's Rehn: Central scenario is that Eurozone is seeing a soft patch but not a recession
- Germany May unemployment change +60k vs -8k expected
- China says that US is not in a position to decide who is a currency manipulator
- France May preliminary CPI +0.2% vs +0.3% m/m expected
- Russia's Siluanov: We will consider extension of OPEC+ deal
Markets:
- CHF leads, NZD lags on the day
- European equities lower; E-minis down 0.6%
- US 10-year yields down 3.5 bps to 2.23%
- Gold up 0.4% to $1,284.20
- WTI down 2.6% to $57.60
- Bitcoin down 0.6% to $8,639
It's all about cautious and softer risk tones in trading so far today as equities generally declined while global bond yields fell in tandem, though movement in the currencies market is a little bit more measured for the most part.
The swissie is the main beneficiary as European equities sell off, with USD/CHF hugging 1.0050-60 levels for the most part. Meanwhile, the yen also gained during the session but then pared some of the advance late on in the European morning with USD/JPY falling to 109.15-20 before sitting at 109.30 levels currently.
Other than that, the dollar held steady amid the cautious risk mood as it gains slightly against the likes of the euro, aussie and pound. EUR/USD sits in a narrow 24 pips range but holds slightly lower at 1.1150 levels now.
Meanwhile, the kiwi is the major laggard as it fell alongside risk sentiment during the session. NZD/USD traded around 0.6540 levels to begin with before touching a low of 0.6515 and is just sitting above that ahead of North American trading.
Looking ahead, expect risk tones to remain a key factor in driving market direction today and to be honest I'm a bit surprised by the lack of movement in USD/JPY amid the decline in Treasury yields. It could be month-end flows helping but that's a spot I'll be watching closely in case of any further extension to the downside.
There's also the Bank of Canada rate decision to come, so keep your eyes and ears peeled for that as well.
