Forex news from the European trading session - 3 October 2018
Headlines:
- UK PM May says will not let country down on Brexit
- US MBA mortgage applications w.e. 28 September 0.0% vs +2.9% prior
- Fed's Evans says gradual rate hikes mean mildly restrictive policy ahead
- Fed's Evans says quite comfortable with idea of a December rate hike
- Italy's Di Maio says 2019 deficit at 2.4% is confirmed
- Eurozone August retail sales -0.2% vs +0.2% m/m expected
- Italian government reported to confirm possibly reducing deficit target in 2020, 2021
- UK September services PMI 53.9 vs 54.0 expected
- Italy Q2 public deficit-to-GDP 0.5% vs 3.5% prior
- Eurozone September final services PMI 54.7 vs 54.7 prelim
- Germany September final services PMI 55.9 vs 56.5 prelim
- France September final services PMI 54.8 vs 54.3 prelim
- Italy September services PMI 53.3 vs 52.8 expected
- Italy's Salvini says will reduce debt over the next few years
- Spain September services PMI 52.5 vs 52.9 expected
- Looking ahead for opportunities from the NFP
- Lessons for traders courtesy of Amazon's Jeff Bezos
Markets:
- EUR and USD leads, NZD lags on the day
- European equities trade higher, Italy leads gains
- US 10-year yields up 1.1 bps to 3.074%
- Gold down 0.06% to $1,202.70
- WTI down 0.05% to $75.19
- Bitcoin down 1.11% to $6,451
Ahead of the session, the euro was feeling perky following reports out of Italy saying that the government may reduce the budget deficit target in 2020 and 2021 to 2.2% and 2.0% respectively. EUR/USD traded to a high of 1.1594 in Asian trading and started European trading around 1.1570-80 levels.
The start of the session played out rather tepidly with only the pound being one of the early movers aided by bids in the euro. GBP/USD rose back above 1.3000 to a high of 1.3017 before tailing off back to the 1.3000 level soon after. UK services PMI produced virtually zero reaction and cable still stuck around 1.2990-00 after that.
But towards the end of the session the dollar gathered bids and bit by bit advanced against the rest of the major currencies. EUR/USD fell to 1.1550 levels initially before paring all of its earlier gains now ahead of US trading. GBP/USD saw a similar move falling to 1.2975 and then touching a low of 1.2963 where it trades just above currently.
The bid in the greenback was broad-based as it continued to weigh down the aussie and kiwi as well. Both commodity currencies already had a tough day/week and poor data from Asian trading certainly didn't help. AUD/USD traded around 0.7160-70 at the start of the session before moving lower to touch a low of 0.7145 in the last hour. NZD/USD traded similarly starting around 0.6570 before inching lower to lows of 0.6554 where it trades near at the moment.
USD/CAD was one of the steadier pairs despite the dollar strength seen in the last hour. The loonie continues to hold on to optimism from the USMCA deal and so far that is limiting losses for the currency on the day. The pair started off around 1.2820 levels before inching up and hit a high of 1.2844 before moving back to trade around 1.2830 levels currently.
Lastly, USD/JPY also saw little action as the pair continues to be driven by US Treasury yields. The yen is slightly weaker against the greenback in trading today as yields inched higher but with no clear break in yields from the current range the pair is also finding it tough to move above the 114.00 level for the time being.
