Forex news from the European trading session - 30 August 2018
Headlines:
- Russia says there are no signals that US wants to reach a compromise
- EU reportedly willing to scrap car tariffs in trade deal with US
- Fitch warns that lira depreciation could lead to further negative rating actions
- German states hint at softer national inflation figures to come later in the day
- Eurozone August final consumer confidence -1.9 vs -1.9 prelim
- UK July mortgage approvals 64.8k vs 65.0k expected
- Germany August unemployment change -8k vs -8k expected
- Germany's Scholz says a disorderly Brexit is still a real possibility
- China says that it had constructive talks with US on current trade issues
- Switzerland August KOF leading indicator 100.3 vs 101.3 expected
- Spain August preliminary CPI +0.2% vs +0.2% m/m expected
- Erdogan says that Turkey won't back down over threats
- Fitch says that it sees Italy's euro exit as 'highly unlikely'
- Germany July import price index -0.2% vs 0.0% m/m expected
- EU's Barnier: Cannot speak about success regarding Brexit
- EU reported to be mulling a full summit in November to discuss Brexit
Markets:
- JPY leads, NZD lags on the day
- European equities all lower, but off the lows
- Gold down 0.18% to $1,204.42
- WTI up 0.65% to $69.95
- US 10-year yields flat at 2.885%
- Bitcoin down 1.68% to $6,924
The session started off slowly with most major currencies trading in a narrow range barring the aussie and kiwi, which were both weighed down since Asian trading as a result of poor economic data releases.
European equities then opened a tad softer before extending those early losses and that slowly pushed flows into the swissie initially. Geopolitical tensions between US and China along with emerging market woes only helped to exacerbate the losses faced by equities and eventually that saw further risk off moves with the dollar and yen also gaining while other currencies fell.
The DAX was the heavy loser among European equities, falling as much as 1.1% while indices were sitting not too far behind. After some calm, the euro and pound slowly recovered some ground again as buyers continue to keep the euro underpinned against the dollar and buyers also show conviction to keep cable above 1.3000.
Late in the session, a report hit the wires that the EU is willing to scrap car tariffs in negotiations with the US and that has seen European equities recover with the DAX now only down by 0.3% and yields are also very much flat on the day too.
That has also helped to provide some stability to major currencies ahead of US trading as they trade narrowly with each other with only the kiwi showing notable losses. Even the aussie has recovered a little on the day.
Looking at individual currencies, EUR/USD traded around 1.1690-00 to begin the session before falling to 1.1675 as risk off flows crept in. The pair then moved back higher to trade around starting levels towards the end of the session.
GBP/USD played out in a similar manner trading around 1.3020-30 before running higher to test a high of 1.3043 early on. The pair then slid a little back to the earlier range before risk off flows sent the pair to test bids just under the 1.3000 handle. But buyers held firm and kept the pair above the figure level and price has moved around current levels since.
USD/CHF may only be in a 30 pips range but the pair tracked to lows of 0.9686 as European equities fell before the dollar also was bid on the back of broader risk off flows and the pair has since traded around 0.9690-10 levels since.
AUD/USD and NZD/USD largely saw moves during the Asian session. Both started the European session near the lows and traded towards 0.7275 and 0.6645 respectively early on. But they both tracked a little higher thereafter and despite risk off flows, there weren't much movement in either currencies to say the least. Both pairs are off their lows for the day but continue to stay weak.
