Forex news from the European morning session - 10 September 2019
Headlines:
- China premier Li says hopes that trade talks will make progress
- BOJ may be more open to debating additional easing next week - report
- US August NFIB small business optimism index 103.1 vs 103.5 expected
- China announces removal of both QFII and RQFII investment quota limit
- UK July average weekly earnings +4.0% vs +3.7% 3m/y expected
- Ireland's McEntee: Yet to see any real evidence of backstop alternatives
- Germany 2020 budget comes without new debt
- Sterling chops around in early morning trade
- Brexit: What happens now that parliament is prorogued?
Markets:
- CHF leads, EUR lags on the day
- European equities mixed; E-minis down 0.1%
- US 10-year yields flat at 1.64%
- Gold down 0.4% to $1,493.95
- WTI up 1.0% to $58.43
- Bitcoin up 0.1% to $10,252
It was a quiet session overall for markets as we saw a bit of choppy trading amid the focus being more on key central bank decisions over the next week or so.
Risk was a tad bit softer early on but recovered to be more flat/cautious overall as market participants aren't really keen on chasing key moves before the ECB this week. USD/JPY held higher since Asian trading though, lingering around 107.30-40 for the most part.
The pound was a notable mover as it gained in early trades with cable racing to a high of 1.2380 before slumping all the way down to 1.2307 where it recovered to 1.2320-40 levels thereafter amid more solid wages data from the UK once again.
Other major currencies remain more subdued, staying in narrow ranges with the euro slightly weaker as Germany announced no take on of additional debt in its 2020 budget.
I would argue that the standout news of the session is China scraping its QFII and RQFII limits, allowing easier access for foreign investments into the country.
If anything else, I would say that this can be seen as China preparing to play the long game in the trade war and are signaling that they are willing to weaponise the yuan if need be. The move above at least helps to limit fear of capital outflows amid such a scenario.
Looking ahead, expect markets to remain more on edge as we have seen so far today as we await the ECB decision on Thursday.
