Forex news from the European morning session - 10 June 2019
Headlines:
- Trump: If Mexico doesn't stick to the deal, then tariffs will be reinstated
- Raab: UK should leave EU on 31 October even if we have to leave on WTO terms
- UK April visible trade balance -£12.1 billion vs -£13.0 billion expected
- UK April GDP -0.4% vs -0.1% m/m expected
- Japan's Abe: Will leave monetary policy exit strategy to BOJ
- Kuroda: BOJ still has room for big stimulus
- Some ECB officials reportedly see risk of inflation expectations becoming deanchored
Markets:
- USD leads, NZD lags on the day
- European equities higher; E-minis up 0.4%
- US 10-year yields up 5.7 bps to 2.138%
- Gold down 1.0% to $1,327.50
- WTI up 0.5% to $54.28
- Bitcoin down 2.7% to $7,682
The dollar is the best performer on the session as it rises alongside a move higher in Treasury yields, retracing losses seen on Friday following the US jobs report. Fed fund futures are currently pricing in ~80% chance of a rate cut in July but with Trump indefinitely suspending Mexico tariffs, it's a boost not only to risk assets but also to economic sentiment and that's helping to alleviate some pressure off of the dollar.
EUR/USD steadily declined from 1.1310 to a low of 1.1290 during the session but has settled just above the figure level with large expiries playing a role in keeping price action anchored as well. USD/JPY pushed higher on improved risk appetite but trades around 108.55-70 for the most part during the European morning.
The pound was a notable mover as it fell following abysmal UK data in April, which saw the weakest monthly GDP report since March 2016. Cable fell from 1.2710 to 1.2685 before recovering to near 1.2700 and then taking a late tumble to test the 200-hour moving average in the past half-hour @ 1.2668.
The aussie and kiwi were also pressured as they surrender gains against the dollar with AUD/USD falling back under the 0.7000 handle. China's trade balance data earlier in the day didn't help either with imports struggling and the surprise boost in exports only came about due to pre-existing orders.
Looking ahead, European traders will pass the baton over to US traders to decide if the improved risk mood will stay the course today. US equity futures are mildly higher but nothing convincing of a major risk-on rally just yet. As mentioned earlier, dollar bears are not out for the count just yet so it'll be an interesting session to see which narrative traders choose to focus on as we begin the new week.
