Forex news from the European trading session - 21 August 2018
Headlines:
- UK August CBI trends total orders 7 vs 8 expected
- PBOC says hopes to be able to communicate with US on yuan comments
- UK July public sector net borrowing -£2.9 billion vs -£2.0 billion expected
- SNB seen raising rates in Q3 2019 - survey
- Germany's Hardt defends the euro and country's trade surplus amid Trump accusations
- PBOC says that its policies are to be more flexible and forward-looking
- UK foreign minister says chances of a no-deal Brexit outcome is not negligible
- China says it wishes to settle trade dispute with US via negotiations
- Trump's comments aren't going to sway the Fed, but this might...
- Switzerland July M3 money supply +2.4% vs +2.4% y/y prior
- Japan July final machine tool orders +13.1% vs +13.0% y/y prelim
- Switzerland July trade balance CHF 2.26 billion vs CHF 2.59 billion prior
- Japan July nationwide department sales -6.1% vs +3.1% y/y prior
Markets:
- NZD, CHF leads, JPY lags on the day
- European equities mostly higher, UK FTSE only one lower
- Gold up 0.30% to $1,194.13
- WTI up 0.83% to $66.98
- US 10-year yields up 2.2 bps to 2.841%
- Bitcoin down 0.24% to $6,440
It was a steady session in European trading today with majority of the major moves happening during Asian trading earlier on. The dollar and yen started the session as the laggards and remained that way as we closed out the session.
Of note, the yen moved lower across the board while the other major currencies traded very much near levels where they started the session with. Economic data releases were scarce and of little importance, so that did not do anything to shake things up. The major theme prevails and that is dollar weakness following Trump's comments overnight and the yen is weaker as risk aversion in markets eases - emerging market rally.
Looking at individual currencies, EUR/USD started the session around 1.1520 and traded towards 1.1540 as the dollar weakened. The pair then retreated back towards 1.1510 before settling around current levels as the session draws to a close.
USD/JPY had a more subdued session trading mostly around 110.00 early on as key levels cluster around the figure level. The pair then slowly inched higher towards session highs now as equities continue to move higher alongside bond yields as risk sentiment improves.
GBP/USD also had a slow trading day ranging between 1.2815-40 for the most part of the session as buyers continue to look towards further upside squeeze in the pair.
USD/CAD is one of the few pairs with a tight range for the day (27 pips) as the loonie failed to capitalise on the dollar's weakness for the most part. But with oil prices trading near the highs, the pair is pushing to session lows currently at 1.3020.
Lastly, AUD/USD and NZD/USD traded rather tepidly after inching to highs in late Asian trading. Both pairs stuck around the highs thereafter even as the dollar retreated supported by a stronger yuan and better risk sentiment in the market today. AUD/USD traded around 0.7350-65 for the session while the NZD/USD traded around 0.6660-75 capped by large offers at 0.6670.
The US trading session will be lacking in terms of key data releases as well so the rest of the trading day will rely on the ebb and flow so let's see if there will be any follow through from the moves seen in Asian trading.
