Forex news from the European trading session - 5 September 2018
Headlines:
- UK's Lidington says Irish border is the only outstanding Brexit issue
- Italy's Di Maio: Government has had productive talks about budget
- Merkel's camp said to want an end of the ECB's low interest rate policy
- OPEC's Barkindo says exploring means of further institutionalising declaration of cooperation
- Eurozone July retail sales -0.2% vs -0.1% m/m expected
- UK August services PMI 54.3 vs 53.9 expected
- Eurozone August final services PMI 54.4 vs 54.4 prelim
- Germany August final services PMI 55.0 vs 55.2 prelim
- France August final services PMI 55.4 vs 55.7 prelim
- Italy August services PMI 52.6 vs 53.1 expected
- Spain August services PMI 52.7 vs 52.0 expected
- Italy's Salvini says budget won't break any EU limits - report
- Australia GDP beat offers something for both AUD buyers and sellers
- BOJ is said to be satisfied with current yield range
Markets:
- GBP lags on the day
- European equities mostly lower, FTSE MIB the exception again
- Gold up 0.24% to $1,194.38
- WTI down 1.39% to $68.90
- US 10-year yields flat at 2.897%
- Bitcoin down 2.92% to $7,145
The session started off with the dollar catching a bit of a bid and moving higher against the rest of the major bloc. EUR/USD fell from around 1.1600 to 1.1570 and AUD/USD fell from 0.7190 levels to 0.7175. European equities then saw red with US equity futures also falling, and with emerging markets coming under the cosh again it prompted some risk off flows in markets as bond yields fell and the dollar, yen and swissie benefited.
The pound was among the ones badly hit in all of this as GBP/USD fell to a low of 1.2820 from around 1.2840 levels. At the same time, EUR/USD also fell to 1.1540 levels while USD/CAD made an attempt to get above 1.3200.
And things didn't get any better for the pound ahead of the UK services PMI release as cable fell to near the 1.2800 handle ahead of the data. Although the data release provided some relief for the pound, it was rather short-lived as sellers remained relentless and drove cable down to a low of 1.2786 thereafter.
But as the session moves along, we started to see currencies recover against the greenback before a real swing in risk sentiment came about towards the end of the session. That sees EUR/USD slowly move higher towards 1.1580 initially before now reaching near 1.1600 again.
At the same time USD/CAD has also tracked lower despite weaker oil prices and trades near the lows for the day at 1.3170. Meanwhile, GBP/USD has also improved to 1.2820 levels at the moment.
Moving ahead, there's still plenty of risk factors to consider with emerging market pressures still among the key items to look out for along with US equities. Apart from that, there's the Bank of Canada decision/statement to look at and also the resumption of NAFTA talks.
