Forex news from the European morning session - 10 January 2019
Headlines:
- Theresa May said to still be working to achieve further assurance from the EU on Brexit deal
- Corbyn: General election must follow if government can't pass Brexit deal
- China says in close contact with US over next stage of talks
- France November industrial production -1.3% vs 0.0% m/m expected
- China says trade talks with US lasted long because both sides were serious and honest
- Reuters poll: Dollar is running out of reasons to rally
Markets:
- AUD leads, GBP lags on the day
- European equities lower; E-minis down 0.6%
- US 10-year yields down 1.1 bps to 2.699%
- Gold flat at $1,293.36
- WTI down 0.6% to $52.03
- Bitcoin down 5.4%% to $3,786
The session started with a slight focus on waning optimism from US-China trade talks as equities settled lower alongside bond yields while the yen pushed higher. USD/JPY began the session around 107.90-00 before tracking to a low of 107.77. The dollar's resolve then started to gain some attention as the dollar pairs ran into some key technical levels.
AUD/USD pushed towards the 100-day moving average with USD/CAD also testing the 100-day moving average overnight, NZD/USD tested the 200-day moving average, EUR/USD looks to keep up gains above 1.1500, and gold is knocking on the door of a break above $1,300.
As the dollar leaned against those levels, it gained some ground mid-way through with EUR/USD slipping from 1.1550 to a low of 1.1518. Poor French data did not help the single currency in that regard. But price now comes back up to around 1.1530 levels.
USD/JPY also saw a recovery towards the 108.00 handle where it trades close to currently. Meanwhile, AUD/USD continues to hug the 100-day moving average sticking around 0.7170-90 levels throughout the session.
The other notable mover has been the pound as cable retraced earlier gains from 1.2790 to fall to a low of 1.2728 as the uncertainty heading into next week's Brexit deal vote weighed on the quid. The pair now trades near 1.2730-40 ahead of US trading.
Looking ahead, expect some focus to be on risk with US equity futures trading lower ahead of the open. But the major focus will be on Fedspeak today with Fed chair Jerome Powell also on the agenda. The dovish remarks are likely to continue so let's see if that will be enough to push the dollar to a breaking point in light of the technical levels highlighted above.
