Forex news from the European trading session - 9 July 2018
Headlines:
- Dominic Raab appointed as new UK Brexit secretary
- Labour lawmakers invited to Brexit plan briefing
- Suella Braverman reported to not yet resign from UK government - BBC
- Eurozone July Sentix investor confidence 12.1 vs 9.0 expected
- Rees-Mogg says confidence vote on UK PM May is not immediately in the offing
- SNB total sight deposits w.e. 6 July CHF 576.0 bn vs CHF 576.4 bn prior
- Japan government pushes back inflation view by a year
- More from Davis: UK PM May can survive my resignation
- David Davis says May's Brexit policy has a number of weaknesses
- Bank of France June industry sentiment 101 vs 100 expected
- Germany May trade balance €19.7 billion vs €20.2 billion expected
- Switzerland June unemployment rate 2.4% vs 2.3% expected
- BOJ maintains economic assessment for all 9 Japanese regions
- Japan June economy watchers survey current conditions 48.1 vs 48.1 expected
Markets:
- AUD leads, USD lags on the day
- European equities higher on the day
- Gold up 0.7% to $1,264.90
- WTI crude down 0.2% to $73.65
- US 10-year yields up 2 bps to 2.85%
- Bitcoin down 0.6% to $6,698
The session started with a hint of a risk-on tone as Asian stocks rallied for the most part, and that provided the platform for the aussie and kiwi to pull off gains on the day. The British pound traded a little lower as ministerial resignations during Asian trading prompted some political uncertainty - particularly that of Theresa May's authority and position as prime minister.
The dollar stayed on the back foot in follow through movement following last Friday's jobs report as the risk-on momentum continued over to European trading. All major currencies except the yen and the loonie posted decent gains against the greenback, with the yen also weaker as a result of positive risk sentiment while the loonie looks tepid with the Bank of Canada decision coming up later in the week.
Other than that, it was rather straightforward dollar weakness all around before David Davis (whose position as Brexit minister is now replaced by Dominic Raab) came out with some conciliatory comments along with pro-Brexit lawmaker Jacob Rees-Mogg. Comments from the two hinted at a less fearful backlash against UK PM May's authority which led to a further relief rally in sterling, as a softer Brexit is now anticipated.
In the meantime, the dollar continued to struggle throughout the session and things are starting to quiet down now as we move towards US trading.
Looking at individual currencies, EUR/USD has been making a steady track higher on the back of dollar weakness. The pair started the session around 1.1740 levels before making a move towards a high of 1.1781 before backing off a little.
USD/JPY was one of the more subdued pairs during the day as both currencies remained weak. The pair traded within a range of 110.30 to 110.55 during the day, with little change seen at the moment from Friday's close.
GBP/USD was one of the more decent movers having touched highs of 1.3320 levels before falling back a little to the 1.3300 handle before making a move towards a high of 1.3363 - and then slipping a little to stay around 1.3320-30 levels currently.
Lastly, AUD/USD at the highs today saw gains of around 0.7% on the day as the aussie remains well bid on the day with a positive twist to risk sentiment. The strength in the Chinese yuan on the day has also helped to provide some comfort as the dollar weakens. The pair made a steady move higher from around 0.7440 to 0.7470-80 levels on the day currently.
