Forex news from the European morning session - 12 June 2019
Headlines:
- Wilbur Ross: Trump and Xi may decide to reopen talks
- US MBA mortgage applications w.e. 7 June +26.8% vs +1.5% prior
- Boris Johnson: I am not aiming for a no-deal Brexit outcome
- Market gauge of long-term euro area inflation expectations continue to hit fresh record lows
- RBA's Ellis: Full employment could go even lower than 4.5%
- China May M2 money supply +8.5% vs +8.6% y/y expected
- China says that Hong Kong matters are purely China's internal affairs
- ECB's Villeroy: Central bank will keep accommodative policy for as long as needed
- Boris Johnson remains by some distance the favourite to become the next PM
Markets:
- JPY leads, AUD lags on the day
- European equities lower; E-minis down 0.3%
- US 10-year yields down 2 bps to 2.122%
- Gold up 0.7% to $1,335.60
- WTI down 2.7% to $51.84
- Bitcoin up 1.2% to $8,020
Markets are generally in a bit of a softer mood but nothing too overwhelming with equities slipping alongside a mild drop in Treasury yields. That kept the yen on more solid footing throughout the session as currencies struggled for firm direction for the most part.
USD/JPY fell from around 108.50 to a low of 108.22 amid the slump in risk sentiment, which came about in the early morning. Among the more plausible reasons are continued global trade tensions and Hong Kong stocks falling due to fresh protests on the China extradition bill, which led to gold being well bid since Asian trading.
The swissie advanced slightly as well before giving back those gains as it falls alongside the euro, after the latter climbed to a high of 1.1343 against the dollar. EUR/USD sits near the lows now near 1.1320 as market confidence towards the ECB continues to hit record lows, risking inflation expectations becoming deanchored.
Meanwhile, the pound climbed briefly as Boris Johnson made a mention that he isn't aiming for a no-deal Brexit as he officially launches his campaign. Cable climbed to a high of 1.2758 before retreating as the dollar also held firm, with cable resting around 1.2730-40 now.
Besides that, the aussie and kiwi remain a little weaker but trapped in narrow ranges against the dollar for the most part. The softer risk mood isn't helping in that regard. Other than that, oil was a notable mover as prices tumbled amid a continued build in inventories as seen from data overnight.
Looking ahead, the US CPI data will be the next focus point of markets as traders will look upon that for more clues about the Fed. But make sure to pay attention to the risk mood as well, with US equities having surrendered gains yesterday, it could be a sign of nervousness still present among investors this week.
