Forex news from the European trading session - 5 June 2018
Headlines:
- More from Conte: Fiscal policy must be aimed at ensuring stable, sustainable growth
- Italy's Conte says he is proud of "radical change" that his government will bring
- US said to have asked OPEC for a 1 mil bpd oil output hike - Bloomberg
- Japan's annual strategy review says necessary to go ahead with 2019 sales tax hike
- Eurozone April retail sales +0.1% vs +0.5% m/m expected
- UK May services PMI 54.0 vs 53.0 expected
- Eurozone May final services PMI 53.8 vs 53.9 prelim
- Germany May final services PMI 52.1 vs 52.1 prelim
- France May final services PMI 54.3 vs 54.3 prelim
- Italy May services PMI 53.1 vs 53.0 expected
- Spain May services PMI 56.4 vs 56.0 expected
- France YTD April budget balance -€54.3 bn vs -€33.1 bn prior
- BOJ's Wakatabe says no specific policy in mind for future use
- Full statement of the RBA's June monetary policy meeting decision
- RBA leaves cash rate unchanged at 1.50%
Markets:
- GBP leads, AUD lags on the day
- European equities mostly higher, UK FTSE lower as sterling rises
- Gold down by 0.07% to $1,291.06
- WTI down by 0.37% to $64.51
- US 10-year yields down by 2.4 bps to 2.918%
- Bitcoin down by 1.41% to $7,420
The session started off slow with all major currencies trading in a roughly 30 pips range against the US dollar. We saw the RBA leave its cash rate unchanged at 1.50% for a record 22 straight months. That barely produced any reaction in the aussie, and rightfully so. AUD/USD traded at 0.7630 then and it is trading at 0.7622 as head into US trading.
The session started got a bit more interesting after we had the UK services PMI release for May. Cable was trading around 1.3330 levels prior the release, before popping to 1.3370 levels on the beat. The data helps to reaffirm the notion that the soft patch in Q1 may be temporary, but it's not enough to convince the BOE of any rate hikes any time soon. Cable extended gains to 1.3393 on the session, but fell thereafter. As noted earlier, Brexit risks will start to come in fast and heavy this month and that will weigh on sterling gains for the time being.
Other major currencies saw little movement, with USD/JPY trading around 109.70 to 109.80 levels for the most part this session. The 30 pips range for the day basically highlights that. A similar tone can be seen in AUD/USD and NZD/USD as well.
USD/CAD was trading very much in the same manner, but then a Bloomberg report was released that the US has requested Saudi Arabia and some OPEC members to increase output production by 1 million bpd. The figure was also reported two weeks ago in talks between Saudi Arabia and Russia, but the reinforcement here was enough to send oil lower.
In turn, USD/CAD touched a high of 1.2951 before extending gains to a high of 1.2983 on the session and trades near there at the moment.
Coming up in the US session, we'll have more PMI data as we'll see final readings for the US services and composite PMI readings as well as the ISM non-manufacturing PMI reading.
