Forex news from the European morning session - 4 April 2019
Headlines:
- Italy said to cut 2019 GDP growth forecast to 0.1% from 1.0%
- House of Lords debate on Brexit delay bill could run into the wee hours of the night
- Leading economic institutes cut 2019 German growth forecast to 0.8% from 1.9%
- Germany March construction PMI 55.6 vs 54.7 prior
- Barnier: We could allow Brexit delay until 22 May but it is up to EU leaders
- Germany February factory orders -4.2% vs +0.3% m/m expected
Markets:
- JPY leads, CAD lags on the day
- European equities mixed; E-minis flat
- US 10-year yields down 2.5 bps to 2.499%
- Gold up 0.1% to $1,291.04
- WTI up 0.4% to $62.68
- Bitcoin down 6% to $4,957
It was a quiet session as markets settled into a bit of a lull, keeping one eye on the release of tomorrow's US jobs report. There wasn't much on the economic calendar in the European morning to shake things up but we did see Germany's factory orders in February crater, posting its biggest monthly drop since January 2017.
However, that barely dented the euro with EUR/USD hugging levels around 1.1235-45 before falling to a low of 1.1221 after Italy is reported to cut its growth forecast for 2019. That said, the trading range for the pair (and all others) remains relatively narrow.
The pound was a notable mover with cable holding highs around 1.3170-80 in the early morning before giving those up to fall to near flat levels around 1.3140-50 levels as some skepticism arose surrounding the Lords debate/vote on the Brexit delay bill. Ultimately, I still see that passing but as of now, cross-party talks between Tories and Labour are unlikely to yield anything positive so that's not going to offer much hope for a solution to break the Brexit deadlock we're seeing.
Risk sentiment is very much muted with European equities trading mixed, similar to that in Asia. Meanwhile, US equity futures are virtually flat on the session with bond yields holding slightly lower since the start of trading today. That's offering little direction for currencies to work with ahead of tomorrow's NFP release.
Overall, major currencies are less than 0.1% changed against the dollar now and that underscores the type of trading sentiment we're seeing in markets at the moment. Let's see if Trump's meeting with Chinese vice premier Liu He can help to inject some life into the trading day before we continue with the lull tomorrow.
