Forex news from the European morning session - 3 January 2019
Headlines:
- US December Challenger job cuts +35.3% vs +51.5% y/y prior
- Fed's Kaplan says he favours taking no rate action in first couple of quarters
- Apple warning a double-edged sword for risk sentiment?
- US MBA mortgage applications w.e. 28 December -8.5% vs -1.4% prior
- EU says that there are no further meetings with UK on Brexit being planned
- Currencies flash crash recap: Where are we now?
- UK December construction PMI 52.8 vs 52.9 expected
- Earthquake reported in Japan's Fukuoka prefecture
- Eurozone November M3 money supply +3.7% vs +3.8% y/y expected
- Switzerland December manufacturing PMI 57.8 vs 56.9 expected
- UK's Barclay says no-deal Brexit far more likely if parliament rejects May's deal
Markets:
- JPY leads, GBP lags on the day
- European equities lower, tech weighed down; E-minis -1.4%
- US 10-year yields up 1.9 bps to 2.640%
- Gold up 0.3% to $1,288.25
- WTI up 0.2% to $46.64
- Bitcoin down 1.3% to $3,835
The European morning didn't see the kind of volatile movements that was experienced in Asian trading today as markets settled down quite a bit awaiting for US stocks to reaffirm the earlier moves. USD/JPY started the session around 106.80-90 before slowly recovering some ground towards 107.30 and then moving up to near the 108.00 handle - which remains a key near-term level at the moment. Price failed to test and break above said level before moving back now to 107.50-60 levels.
Elsewhere, there wasn't much change overall in terms of risk sentiment with US equity futures trading lower with S&P 500 futures down by around 1.2% to 1.7% throughout the session. Nasdaq futures continue to be weighed lower by more than 2% as Apple shares continue to weigh down the tech-heavy index in pre-market trading.
EUR/USD was a bit of a mover as the pair inched higher to 1.1384 before encountering some resistance and then now moving to near flat levels on the day at 1.1350 as the dollar regains some poise.
There wasn't much other notable movement throughout the session as the aussie and kiwi continues to be weighed lower but saw little action after recovering from the lows seen during Asian trading. AUD/USD ranged between 0.6940-70 for the most part so far.
Meanwhile, the pound continues to come under pressure as Brexit worries continue to be an anchoring factor for the quid. It is the worst performing major currency as we head into US trading despite cable rebounding to 1.2560 levels from a low of 1.2441 earlier on in Asia.
The focus of markets will remain on risk as traders will be looking towards how US equities perform later today for a sense of how much the flash crash in Asia is justified, despite it being exacerbated by thin liquidity conditions. If anything, traders will look towards stocks to reaffirm the trend rather than be chasing the exact same magnitude of the moves.
