Forex news for the European trading session - 30 May 2018
Headlines:
- Five Star's Di Maio said not be the seeking alliance with Lega - report
- Italy 10-year bond auction sees average yield come in at 3.00%
- Eurozone May final consumer confidence 0.2 vs 0.2 prelim
- North Rhine Westphalia May CPI +0.4% vs 0.0% m/m prior
- Hesse May CPI +0.5% vs 0.0% m/m prior
- Baden Wuerttemberg May CPI +0.5% vs 0.0% m/m prior
- OECD sees global economy growing 3.8% in 2018
- Switzerland May Credit Suisse investor sentiment 28.0 vs 7.2 prior
- Bavaria May CPI +0.5% vs -0.1% m/m prior
- Brandenburg May CPI +0.7% vs -0.1% m/m prior
- Germany May unemployment change -11k vs -10k expected
- Italy's Five Star and Lega said to try again to form a government
- Switzerland May KOF leading indicator 100.0 vs 104.7 expected
- Spain May preliminary CPI +0.9% vs +0.5% m/m expected
- Saxony May CPI +0.5% vs 0.0% m/m prior
- France Q1 GDP second reading +0.2% vs +0.3% q/q prelim
- Latest opinion poll show stronger support for Italy's Lega party
- IMF maintains China's 2018 GDP growth forecast at 6.6%
- Germany April retail sales +2.3% vs +0.5% m/m expected
- Japan May consumer confidence index 43.8 vs 43.9 expected
Markets:
- NZD leads on the day, JPY lags behind
- European equities mostly higher, Italy MIB leads
- Gold down by 0.10% to $1,297.59
- WTI up by 0.06% to $66.77
- US 10-year yields up by 10 bps to 2.877%
- Bitcoin up by 0.04% to $7,504
It's been a session where the focus was solely on Italy once again. There was a couple of data points in between but they didn't truly matter as the markets looked towards Italian assets for clues and it signaled a reversal of yesterday's risk-off tone.
The kiwi and aussie are the among the beneficiaries from that with the commodity currencies rallying on the day as stocks in Europe recover from yesterday's losses. Italy's MIB is now up almost 2% on the day as bank stocks are up as Italian bonds hold steady and recover from yesterday's dreadful day.
The signal also gave the green light for euro buyers to come back in. As Italian markets opened, EUR/USD rallied to a high of 1.1570 before edging slowly towards 1.1600 and currently trades near the highs at 1.1635. The stretch of German states CPI readings also didn't do any harm as they showed a bounce back in inflation after April's figures were muddied by Easter seasonality.
In terms of political developments, it looks like Five Star and Lega will be campaigning on their own ahead of fresh elections. But unless the electoral law changes, it is almost certainly that these two will come out as the two leading parties once again - and we'll be back where we started in terms of a government formation in Italy.
Safe haven currencies are the laggards on the day with USD/JPY trading around 108.70 to 108.90 levels for the most part - with the dollar index itself down 0.5% on the day given the rise in the euro today.
The loonie is also a little higher heading into North American trading, but gains are so far limited with the Bank of Canada decision to come later on.
Also, sincerest apologies as the updates today were a little sluggish as there are technical issues at the back-end. Hoping they'd get resolved soon.
