Forex news from the European session - 13 December 2018
Headlines:
- ECB leaves key rates unchanged as expected
- OPEC pledge to cut oil output is being met with skepticism
- PBOC's Yi says China economic growth has neared potential rate
- ECB is said to lower 2019 inflation forecast in updated outlook later
- SNB's Jordan: Swiss franc is highly valued, FX market situation is still fragile
- SNB leaves sight deposit interest rate unchanged at -0.75%
- Switzerland November PPI -0.3% vs +0.1% m/m expected
- China is said to plan more US soybean purchases as soon as today
- France November final CPI -0.2% vs -0.2% m/m prelim
- Italian bonds rejoice as government lowers budget deficit target in latest proposal
- Germany November final CPI +0.1% vs +0.1% m/m prelim
Markets:
- GBP leads, JPY lags on the day
- European equities mixed, moving from highs to lows then just off that now
- US 10-year yields down 0.9 bps to 2.900%
- Gold down 0.25% to $1,242.50
- WTI down 0.92% to $50.69
- Bitcoin down 1.31% to $3,385
The session began with a positive mood for risk sentiment as E-minis raced to 0.6% gains and the aussie and kiwi were leading the major currencies bloc. But as the session progressed, the euro and the pound stole the spotlight as the former gained after Italian bonds rose following the improved budget proposal by Conte overnight.
That seemed to suggest that the Italian debt situation will be at least sidelined for the time being and EUR/USD rose from 1.1360 levels to a high of 1.1393 before settling around 1.1380. Markets awaited the ECB decision thereafter and the euro hit a bit of a whipsaw following the ECB statement - which didn't offer much really - and EUR/USD now settles close to 1.1370 ahead of Draghi's presser.
Meanwhile, GBP/USD rose from 1.2630 levels to a high of 1.2687 as the pound caught a second wind following May's victory overnight. But price ran into resistance from the 200-hour MA as sellers defended the level and that saw the pound give back some of its earlier gains as the session wound down. GBP/USD settles around 1.2650-60 levels at the moment.
Apart from that, there was notable movement in equities with a sudden knock lower for E-minis and European equities mid-way through the session that saw US equity futures basically pare all gains for the day and are trading near flat levels ahead of the cash equity market open later.
That saw the aussie and kiwi give back some of their earlier gains against the dollar but it didn't really deter yen pairs by much. USD/JPY still sits near the highs for the day and trades between 113.40-50 for the entire session so far.
The final notable move in markets was oil as reports suggesting OPEC cuts may not be as what was announced last week saw oil slip from $51.20 to a low of $50.35 earlier. That knocked the wind out of the loonie's sails as well with USD/CAD rising to a high of 1.3375 from 1.3350 earlier and is settling just under that now.
The focus of markets now turn towards US and Canadian data at the bottom of the hour, but also Draghi's presser to come at the same time. Also, watch out for how US equities perform later as that will surely spark USD/JPY into life after what has been a rather dull day for the pair.
