Forex news from the European morning session - 13 May 2019
Headlines:
- Trump sends open message to Xi: China will be hurt very badly if you don't make a deal
- Trump says that "China should not retaliate - will only get worse!"
- EU's Malmstrom: Would retaliate immediately if US decides to impose tariffs
- SNB total sight deposits w.e. 10 May CHF 578.1 bn vs CHF 577.7 bn prior
- BOE's Broadbent reiterates that any BOE rate hikes will be gradual
- China says that will never surrender to foreign pressure
- Japan's Suga says no change to government plan to raise sales tax in October
- China says trade retaliation measures will be released at some point
- UK's Barclay: We are at risk of 'sleepwalking' into staying in the EU
Markets:
- CHF leads, AUD lags on the day
- European equities lower; E-minis down 1.3%
- US 10-year yields down 4.3 bps to 2.424%
- Gold down 0.2% to $1,283.75
- WTI up 1.3% to $62.45
It's all about US-China trade tensions after both sides failed to reach a compromise or a pleasant end to talks in Washington last week. Comments from both Trump and the Chinese camp over the weekend confirmed that and markets responded with a more negative sentiment to begin the new week.
USD/JPY continues to sit lower around 109.60-70 as Treasury yields are weighed lower alongside US equity futures, which have been down by more than 1% throughout the day. The lower yields have helped to keep the yen underpinned with AUD/JPY also hovering near session lows now at 76.41 ahead of US trading.
The more pessimistic risk tones is also helping to heap pressure on risk/commodity currencies as the aussie, kiwi and loonie are trading lower on the day. The aussie is bearing the brunt of the beating with AUD/USD staying well below the 0.7000 to test last week's lows around 0.6963-67 during the session.
Meanwhile, the dollar is trading mixed on the day as it advances against the risk/commodity currencies but is finding it tougher against the rest of the major bloc. This comes despite a decline in the Chinese yuan and EM currencies as US-China trade relations look to be headed towards a stalemate for now.
Among the notable gainers today is the franc, which advanced during the European morning with USD/CHF falling from 1.0115 to a low of 1.0077. The other outperformer so far today is oil as prices hold firm amid geopolitical tensions as Saudi Arabia claims that two of its tankers have been attacked on their way towards the Persian Gulf over the weekend.
