Forex news from the European trading session - 3 September 2018
Headlines:
- UK PM spokesman says Chequers proposals are the only credible and negotiable Brexit plan
- UK August manufacturing PMI 52.8 vs 53.9 expected
- SNB total sight deposits w.e. 31 August CHF 576.2 bn vs CHF 576.8 bn prior
- Eurozone August final manufacturing PMI 54.6 vs 54.6 prelim
- Germany August final manufacturing PMI 55.9 vs 56.1 prelim
- Turkey's finance minister reiterates that central bank would not hesitate to take necessary steps
- France August final manufacturing PMI 53.5 vs 53.7 prelim
- Italy August manufacturing PMI 50.1 vs 51.2 expected
- CBRT says that monetary stance will be adjusted in September meeting
- Switzerland August manufacturing PMI 64.8 vs 61.0 expected
- Switzerland July retail sales -0.3% vs +0.3% y/y prior
- Spain August manufacturing PMI 53.0 vs 52.5 expected
- Italy's Salvini says wants budget deficit close to but below 3% of GDP
- Oman says some OPEC+ states has had trouble reaching own output quotas
Markets:
- AUD leads, GBP lags on the day
- European equities mixed, FTSE leads gains as pound falls
- Gold flat at $1,201.44
- WTI up 0.16% to $69.90
- Bitcoin up 2.71% to $7,236
It was a relatively calm session to start the week as European traders were greeted to a slew of factory PMI readings in the Eurozone. The pound was already soggy to begin with as weekend Brexit comments from Barnier weighed on the currency. GBP/USD started the session around 1.2930 before steadily moving lower towards 1.2900 as the session progressed.
The PMI figures for Italy, France and Germany disappointed but the overall Eurozone print held steady from initial estimates - albeit at almost two-year lows. That did little to shake the euro though as trading today has been light across the board. EUR/USD hovered around 1.1600 to 1.1620 for the most part in the session.
Then, we had the release of the UK print which disappointed. It was the weakest reading in 25 months and that sent the pound lower a little across the board. Cable touched a low of 1.2884 on the back of that before recovering back to 1.2900 and then making its way lower to touch a low of 1.2864 on the session.
The Australian dollar is the leader in trading today, after having touched near two-year lows at 0.7166 against the dollar in Asian trading on the back of softer data as well. But the recovery here has more to do with technical/positioning more than anything else in my view, and the pair trades near the highs still just above 0.7200.
Apart from that, there is the continued back and forth speculation on BOE governor Carney's tenure and we had Turkey's central bank also hinting at a rate hike to come on 13 September. That helped to lift the lira a little on the day but the bleeding hasn't yet stopped as the lira fell thereafter still - although losses have been limited since.
In the session ahead, US and Canadian markets are closed today so expect thinner liquidity to play out.
