ForexLive European FX news wrap: Risk aversion returns
Forex news from the European trading session - 1 July 2020
- Germany's Merkel: EU members still far apart on recovery fund, budget
- US MBA mortgage applications w.e. 26 June -1.8% vs -8.7% prior
- Italy plans to pass another €20 billion in economic stimulus this month - report
- Austria reports highest daily new coronavirus infections since April
- UK June final manufacturing PMI 50.1 vs 50.1 prelim
- Eurozone June final manufacturing PMI 47.4 vs 46.9 prelim
- Germany June unemployment change 69.0k vs 120.0k expected
- Germany June final manufacturing PMI 45.2 vs 44.6 prelim
- France June final manufacturing PMI 52.3 vs 52.1 prelim
- PBOC: China consumer prices to rise within a reasonable range this year
- Germany May retail sales +13.9% vs +3.5% m/m expected
- UK June Nationwide house prices -1.4% vs -0.6% m/m expected
- China says that US have "gone too far" on sanctions
- JPY leads, EUR lags on the day
- European equities lower; E-minis down 0.9%
- US 10-year yields up 2 bps to 0.677%
- Gold down 0.1% to $1,779.15
- WTI up 1.7% to $39.95
- Bitcoin flat at $9,148
It is a session of two halves in European morning trade, as the opening hours saw little to no firm direction in the market with the Eurex being down and the Deutsche Boerse reporting problems with its T7 system - the DAX was not trading for a few hours.
That had an impact on liquidity and kept markets more unsettled before we see a tilt towards risk aversion now going into US trading. Just be mindful that Canadian markets are closed so that may have some impact on liquidity in the loonie in the session ahead.
As for currencies in general, the yen kept firmer since Asian trading and extended gains with USD/JPY slipping from 107.75 to 107.50. The dollar chopped around initially before pushing gains amid the risk-off patch we're seeing now.
EUR/USD slowly eased from 1.1220 to 1.1185 before sticking closer to 1.1200 currently. Meanwhile, AUD/USD bounced around 0.6890-10 before retreating towards 0.6880 as risk is seen on the softer side towards the tail-end of the session.
As we have now moved past quarter-end trading (and the window dressing period), the focus of the market should shift back towards virus developments in the US once again.
That is likely to keep markets in-check but as a reminder to last Friday, it took so much for sellers to even get an edge considering the circumstances.
The push and pull between the bulls and the bears is continuing, so we'll have to see if there will be a tipping point this week ahead of the 4th of July holiday break.