Forex news from the European morning session - 14 May 2019
Headlines:
- Saudi Aramco pumping stations reportedly targeted in 'limited attack'
- Trump says US is in a 'fantastic position' against China on trade
- Fed's Williams says central bank adheres to mantra of data dependency
- Fed's Williams: US monetary policy is in a good place
- Germany May ZEW survey current situation 8.2 vs 6.3 expected
- US April NFIB small business optimism index 103.5 vs 102.0 expected
- UK March average weekly earnings +3.2% vs +3.4% 3m/y expected
- China declines to comment on reports regarding US Treasury holdings
- China says that it doesn't want a trade war but it isn't afraid of one
- Fed's Williams: Sees no reason to expect neutral rates to revert higher in the foreseeable future
- ECB's Villeroy: March policy is 'appropriate at this stage'
- Spain April final CPI +1.0% vs +1.0% m/m prelim
- Germany April final CPI +1.0% vs +1.0% m/m prelim
Markets:
- NZD leads, JPY lags on the day
- European equities higher; E-minis up 0.7%
- US 10-year yields up 1.8 bps to 2.419%
- Gold down 0.3% to $1,296.06
- WTI up 1.2% to $61.79
- Bitcoin up 2.9% to $8,094
Markets are in a much calmer mood today after Trump had earlier mentioned that he still sees a trade deal succeeding in the coming weeks and that allowed risk assets to take a bit of a breather after the beat down suffered yesterday.
US equity futures are holding higher alongside Treasury yields and that has seen the Japanese yen slump on the session, with USD/JPY rising from around 109.50-60 to highs now around the 109.70 levels.
The likes of the aussie and kiwi are also holding much steadier after declines yesterday, while the loonie is gaining on the back of higher oil prices - after two of Saudi Arabia's pumping stations were subject to a terrorist attack.
The dollar is holding somewhat steady with EUR/USD bouncing between 1.1230-40 for the most part, with large expiries rolling off at 1.1240 keeping price action largely in-check.
The optimism in markets isn't overly great as they do not erase the losses suffered yesterday but it is a mild recovery at least for the time being. It's still all about risk sentiment right now so expect that to continue to play a part in dictating market direction.
I reckon risk trades can get some breathing room over the next few days but don't expect any stunning rallies. As seen by the language from China (headline in bold), tensions are no longer being regarded as a trade dispute but is now being regarded as a trade war again.
This was also noted by Bloomberg in an article moments ago as well:
