Forex news from the European morning session - 14 January 2019
Headlines:
- UK PM May: If parliament rejects deal, outcomes are no-deal or risk no Brexit at all
- China's premier Li says economic growth faces increasing downward pressure in 2019
- EU says not in a position to agree to anything that changes withdrawal agreement in Brexit backstop letter
- Eurozone November industrial production -1.7% vs -1.5% m/m expected
- SNB total sight deposits w.e. 11 January CHF 575.2 bn vs CHF 574.0 bn prior
- Economists push back ECB rate hike forecast to Q4 2019
- Germany December wholesale price index -1.2% vs +0.2% m/m prior
Markets:
- JPY leads, AUD and NZD lag on the day
- European equities lower; E-minis down 0.8%
- US 10-year yields down 2.5 bps to 2.676%
- Gold up 0.5% to $1,293.82
- WTI down 0.9% to $51.12
- Bitcoin down 3.2% to $3,533
The session had a hint of a risk-off tone as markets focused on abysmal December trade figures from China, which only served as a reminder of concerns surrounding the global economy as it faces a slowdown. USD/JPY started the session around 108.20 before moving lower as Treasury yields came under pressure. The pair hit a low of 107.99 before trading just above the 108 handle currently.
Meanwhile, the aussie and kiwi came under pressure earlier in Asian trading and continues to stay that way ahead of North American trading now. AUD/USD is running into key support levels (100-day and 100-hour moving averages) as it moved to a low of 0.7176 before moving up to where it was as the session began around 0.7180-90 levels.
The pound was a notable mover as well in the session as cable fell to a low of 1.2819 early on after the EU was reportedly willing to offer assurances that would not aid May in her quest to win tomorrow's meaningful vote. However, that was very much the expected outcome and cable rebounded to 1.2830 levels thereafter before getting a lift towards 1.2870 levels after May made a mention that the risk of a no Brexit outcome is starting to outweigh that of a no-deal outcome.
The pound is holding on to some of those gains still as it trades around 1.2860 at the moment. As for EUR/USD, the pair remains subdued as it moved between 1.1450-70 levels throughout the session.
Looking ahead, risk remains a key theme to look out for as US equities look set to come under pressure ahead of the opening bell. Meanwhile, financials will kick start earnings season so watch out for that. Of note today, Citigroup will be reporting earnings first before JP Morgan and Wells Fargo do the same tomorrow.
All that said, the US government shutdown enters into its 24th day and this marks the longest shutdown on record for the country with no end still seen in sight.
