Forex news from the European trading session - 13 September 2018
Headlines:
- ECB leaves key rates unchanged as expected
- CBRT raises one-week repo rate to 24.00% from 17.75%
- BOE leaves bank rate unchanged at 0.75%, votes 0-0-9
- European Commission spokesman says will not reconsider Brexit divorce bill
- Carney is said to have outlined BOE's planning for a no-deal Brexit in Cabinet meeting
- Erdogan: We must lower interest rates
- IEA warns of higher oil prices as Iran, Venezuela situations intensify
- China defends growing trade surplus to the US
- Switzerland August PPI 0.0% vs 0.0% m/m expected
- China says it has received invitation from US for trade talks, welcomes it
- France August final CPI +0.5% vs +0.5% m/m prelim
- Germany August final CPI +0.1% vs +0.1% m/m prelim
- Turkey moves to ban foreign currency transactions for property sales and rental agreements
Markets:
- AUD leads, JPY lags on the day
- European equities all higher
- Gold flat at $1,206.04
- WTI down 1.28% to $69.47
- US 10-year yields up 1.7 bps to 2.979%
- Bitcoin up 2.68% to $6,475
With all the central bank meetings in focus, the main theme in markets today could be easily forgotten. And that is risk sentiment continues to look up. With that, the aussie is leading gains on the day while the yen is trailing.
However, the lira stole the show on the day firstly weakening by almost 3% against the greenback as Turkish president Erdogan called for the central bank to cut rates ahead of the monetary policy decision. USD/TRY rose from 6.45 to a high of 6.55 on the back of those comments. But the CBRT had other plans and raised the one-week repo rate by 625 bps, sending the lira soaring. USD/TRY fell to a low of 6.01 before climbing back to 6.19 levels currently.
In the major currencies space, the aussie started the day on a more solid footing already around 0.7190 levels as positive risk sentiment from US-China trade talks and solid employment figures helped boost the currency. AUD/USD traded in a range between 0.7170 to 0.7190 for the session as the aussie stays underpinned on the back of those two factors.
EUR/USD was a little more lively slipping to a low of 1.1609 as the dollar squeezed some gains early on before moving back to 1.1630 levels where it settled ahead of the ECB statement. All eyes now turn to Draghi and US CPI figures to give the pair a bit of a wake up call after snoozing through most of the session.
GBP/USD saw a much similar movement with the pair falling to a low of 1.3026 before recovering to 1.3050 levels ahead of the BOE decision. There was a slight uptick in Q3 growth forecast by the BOE that sent the pair up to 1.3070 briefly before settling back to near unchanged levels on the day now.
USD/CAD and NZD/USD traded more tepidly as both pairs sit in a 26 pips and 23 pips range respectively on the day. The kiwi is offered and cross-selling against the aussie pins it lower while the loonie remains in limbo awaiting further developments in NAFTA talks.
The yen is the biggest loser in all of this, having fallen in Asian trading as the Nikkei surged by close to 1%. But higher Treasury yields have also helped to underpin yen pairs on the day as the market sentiment has improved following optimism surrounding trade talks between US and China. USD/JPY traded to around 111.48 early in the day before moving lower to 111.35 but is now trading near session highs of 111.60 ahead of US trading.
