Forex news from the European morning session - 6 November 2018
Headlines:
- UK's Raab gives the thumbs up as he makes his way out of Cabinet
- Pound slips to session low as DUP lawmaker flags potential no-deal Brexit outcome
- Eurozone September PPI +0.5% vs +0.4% m/m expected
- Italy a worry as sluggish Eurozone growth momentum carries into Q4
- EU's Moscovici says expects strong, precise answer from Italy on budget by 13 November
- UK's Fox: Impossible to say if Brexit deal can be reached this month or next
- Ireland's McEntee says that EU position on backstop has not changed
- UK's Fox: Still a number of Brexit issues to be dealt with
- China's oil waiver said to allow purchase of only 360k bpd from Iran
- US mid-term elections made simple
- China's premier Li: Will not resort to strong stimulus in monetary policy
- Germany September factory orders +0.3% vs -0.5% m/m expected
- PBOC adviser says that yuan hitting 7.00 to dollar 'isn't that crucial'
Markets:
- AUD leads, CAD lags behind on the day
- European equities trade lower, E-minis down 0.2%
- US 10-year yields down 0.9 bps to 3.191%
- Gold up 0.30% to $1,235.18
- WTI down 0.38% to $62.86
- Bitcoin up 0.20% to $6,414
The session started off with focus on risk tones as Asian equities traded mix with investors keeping an eye on the US midterm elections to come. Risk was mostly flat (E-minis a little higher) early on but the steady showing helped to see the aussie and kiwi push ahead on the day.
AUD/USD started around 0.7215 following the RBA decision but then moved up to reach a high of 0.7240. NZD/USD followed suit by trading up to 0.6680 from 0.6660 levels earlier on. The improved sentiment also saw USD/JPY move to a high of 113.45 earlier in the day, touching a one-month high.
But focus quickly turned to the pound as a slew of Brexit headlines hit the wires. The pound held steady though with cable trading to a high of 1.3085 mid-way through and then slipping back to 1.3060 before DUP lawmaker Donaldson flaunted the possibility of a no-deal Brexit and that sent the pound lower. Cable fell to a low of 1.3021 on the back of that with sterling paring earlier gains against the major bloc, before steadying around 1.3030 levels.
Then, we got a late turnaround as a tweet from BBC's political editor said that UK Brexit secretary Dominic Raab gave the thumbs up when exiting from the Cabinet meeting and that sent the pound back up again. Cable moved up from 1.3030 to 1.3060 levels on the back of that.
Mid-way through, risk also started to turn around a little with E-minis moving lower and trading near the lows currently. As a result, the yen caught a bit of a bid and USD/JPY falls now to trade around 113.15 near flat levels on the day. However, the aussie and kiwi are holding on to their gains for the most part and are still trading near the highs ahead of the US session.
EUR/USD traded more in a more subdued fashion around 1.1405 to 1.1420 for the most part before falling to a low of 1.1392 late on as the pound's drop dragged the single currency down with it. The pair now trades near the lows still but is hugging levels close to the 1.1400 handle.
The loonie is the weakest performing major on the day so far dragged lower by oil prices, which is hitting fresh six-month lows as Iran sanctions kick into place. USD/CAD trades in a narrow range for the day though sitting between 1.3110 and 1.3130 for the most part but is near the highs currently.
Looking at the session ahead, it's all about US midterm elections so get your party hats on as there will be plenty of fun and games to come over the next 24 hours.
