Forex news from the European morning session - 13 March 2019
Headlines:
- US MBA mortgage applications w.e. 8 March +2.3% vs -2.5% prior
- Yields once again proving to be a bane for the aussie
- Eurozone January industrial production +1.4% vs +1.0% m/m expected
- Barnier: EU would want to know why UK wants to extend Brexit talks
- ECB's Angeloni: Italian recession is self-inflicted
- EU27 said to be sticking to tough line on potential Brexit extension
- Spain February final CPI +0.2% vs +0.2% m/m prelim
- UK announces temporary cuts to import tariffs in the case of a no-deal Brexit
- Moscovici: EU has done everything it could for a Brexit deal
Markets:
- GBP leads, NZD lags on the day
- European equities mixed, a little higher; E-minis up 0.2%
- US 10-year yields up 2 bps to 2.62%
- Gold up 0.5% to $1,308.14
- WTI up 0.9% to $57.36
- Bitcoin down 0.6% to $3,844
Markets pretty much settled down after the Brexit mess yesterday with little headlines of note on the matter in the European morning today. It was mostly just European leaders/lawmakers reiterating that they would need some form of definitive majority in the UK parliament on something in order to approve an extension to Brexit.
That said, the pound extended its gains as that remains the most likely outcome that will play out; with overnight implied volatility also receding ahead of the no-deal vote later (which will also be accompanied by vote on several amendments).
Cable steadily climbed from 1.3100 to 1.3170 levels and trades around there now as we approach midday in London. Meanwhile, EUR/GBP is holding near the lows as the pair falls from 0.8620 to around 0.8570 levels currently.
The aussie and kiwi are the laggards on the day as both currencies were not helped by weaker risk sentiment during Asian trading. However, despite risk tones improving, it is mostly a story of yields that is proving to be a drag for the aussie.
Australian 10-year bond yields fell below 2% for the first time since September 2016 and the widening yields spread to Treasuries is what is weighing on the currency today. AUD/USD holds weaker trading between 0.7050-60 levels throughout the session.
There wasn't much else happening on the day with EUR/USD trapped in a narrow range just under the 1.1300 handle as the 1.1290-00 continues to cap gains for numerous reasons as mentioned here.
Looking ahead, US core durable goods orders will come into focus next so keep an eye out on that as it could play a role in impacting dollar sentiment and the risk outlook for the session to come.
