Forex news from the European morning session - 30 April 2019
Headlines:
- China says trade talks with US have achieved 'much positive progress'
- Recap: Germany states' CPI readings set out upside bias for national reading later
- Italy Q1 preliminary GDP +0.2% vs +0.1% q/q expected
- Italy April preliminary CPI +0.2% vs +0.2% m/m expected
- Eurozone Q1 preliminary GDP +0.4% vs +0.3% q/q expected
- Germany April unemployment change -12k vs -7k expected
- Spain April preliminary CPI +1.0% vs +1.1% m/m expected
- Spain Q1 preliminary GDP +0.7% vs +0.6% q/q expected
- France April preliminary CPI +0.2% vs +0.3% m/m expected
- UK's Lidington: Brexit talks with Labour were positive and productive
- France Q1 preliminary GDP +0.3% vs +0.3% q/q expected
Markets:
- GBP leads, AUD, CHF and USD lags on the day
- European equities mixed; E-minis flat
- US 10-year yields flat at 2.528%
- Gold up 0.5% to $1,286.05
- WTI up 1.4% to $64.37
- Bitcoin up 1.2% to $5,192
It was an action-packed session as currencies moved all over the place with economic data releases adding to the commotion as well. The dollar began the day in a more positive mood as markets focused on poor Chinese PMI data, resulting in a drop in Treasury yields and a slight risk-off tilt.
USD/JPY fell from 111.40-50 to 111.30 as a result of that and failed to really recover despite yields coming back up as the dollar turned weaker subsequently during the session.
EUR/USD fell initially to 1.1176 but then popped back up to 1.1195 after upbeat Spanish Q1 GDP figures as well as a notable jump in inflation from the Saxony report. As euro area economic data continued to trickle in, all the signs from the GDP and inflation data pointed to a 'bend but don't break' rhetoric which helped the euro to continue its rise above 1.1200 against the dollar.
However, the runaway mover was the pound as it climbed despite a lack of fresh Brexit developments. There have been reports since the weekend that talks between the government and Labour are making good progress so perhaps that is part and parcel to what is driving the move here.
That said, this feels more like a technical break for me as cable broke above its 200-hour moving average - thereby establishing a more bullish near-term bias - and buyers rode on that to climb above the 1.3000 handle.
As the euro and pound gained, flows moved out of the dollar and the greenback also pared its earlier gains against the aussie with AUD/USD rising from 0.7040 to 0.7050 levels currently. USD/CAD also slipped from highs near 1.3480 to lows at 1.3440 now as the dollar weakened and oil prices are seen recovering in the European morning.
Expect month-end flows to play a role still as we move towards North American trading before markets settle into a lull ahead of the FOMC meeting tomorrow.
