Forex news from the European morning session - 13 February 2019
Headlines:
- The Brexit state of play
- Eurozone December industrial production -0.9% vs -0.4% m/m expected
- UK January CPI -0.8% vs -0.7% m/m expected
- IEA: Venezuela crisis risks disrupting global crude market
- Brexit: Labour says that they will officially back the Cooper amendment
- BOJ's Kuroda: Still believes inflation is slowly moving towards 2% target
- Risk continues to stay buoyed on optimism surrounding US-China trade talks
Markets:
- NZD leads, JPY lags on the day
- European equities higher, Spain lower as parliament rejects budget
- US equity futures up 0.3%
- US 10-year yields flat at 2.685%
- Gold down 0.1% to $1,309.56
- WTI up 0.9% to $53.58
- Bitcoin up 0.1% to $3,580
The session was more or less a straightforward one right up until the last hour when the pound spiked higher on what I would believe to be a sudden surge in trading volume (two of our readers noted that it was related to a large transaction in GBP futures) before giving back those gains over the next half-hour.
Cable was initially brought lower on the day from 1.2910 to 1.2874 as the dollar held firm and the pound slipped a little on the back of a weaker-than-expected inflation report. But price climbed back up to 1.2890 levels before the spike came about and brought the pair to a high of 1.2958.
The highs stalled just under the 200-hour MA, before it all came crashing back down as it trades close to 1.2900 now ahead of North American trading. When it comes to fishy price action like this, it always tends to fade away.
Other than that anomaly, the rest of the session progressed in a more calm manner with the dollar holding its own and recouping losses against the likes of the loonie, kiwi and aussie while extending gains against the euro.
EUR/USD began the session around 1.1330 before slipping to 1.1315 as the dollar gained and Eurozone industrial production data saw output fall to its weakest pace since the global financial crisis. The pair recovered to 1.1330 on the back of the pound spike above but quickly retraces to session lows near 1.1300 with US CPI data due at the bottom of the hour.
The kiwi remains the lead gainer after it jumped as the RBNZ was less dovish than expected earlier in Asian trading. NZD/USD started the morning around 0.6840 but has slowly made its way lower to trade just above 0.6810 currently.
Looking ahead, risk sentiment continues to be buoyed on optimism surrounding trade talks in Beijing so that's likely to keep yen pairs underpinned. But be wary of changes in sentiment in Wall Street as headlines are still few and far between with regards to how things are developing.
As for currencies, the key risk event is the US CPI report to come as that will provide traders with more direction on dollar sentiment in the day to come.
