Forex news from the European trading session - 15 October 2018
Headlines:
- Brexit: British MPs reportedly trying to persuade May to ditch Chequers
- UK PM spokesman says still focused on getting a Brexit deal in the coming weeks
- Italian government 2019 budget approval reported to slip to Tuesday
- European Commission says it is intensifying contingency work for no-deal Brexit scenario
- Brexit: EU says that this week's summit may not produce Brexit breakthrough
- ECB's Rehn says latest core inflation data was somewhat disappointing
- Brexit: Coveney says backstop must not be time-limited as insurance for Ireland
- Is it about time to take this out of your back pocket?
- SNB total sight deposits w.e. 12 October CHF 577.6 bn vs CHF 577.5 bn prior
- Switzerland September PPI -0.2% vs +0.3% m/m expected
- Brexit: DUP says that no deal outcome is "probably inevitable"
- Understanding Italy's budget problem
- Has the S&P 500 narrowly escaped another potential downturn?
- RBA's Harper says economy is getting a tailwind from lower Australian dollar
Markets:
- CHF leads, USD lags on the day
- European equities mixed on the session
- US 10-year yields flat at 3.159%
- Gold up 0.93% to $1,229.21
- WTI up 0.70% to $71.84
- Bitcoin up 3.23% to $6,415
The major trading theme in markets from last week has carried forward to the new week as the session began with notable weakness across the equities space and that kept the yen and swissie bid as European trading began. USD/JPY started the session around 112.05 but moved lower to 111.80 as the yen gathered further bids with E-minis seen declining.
Although the general market tone was a little negative as equities continued to slip, the dollar once again failed to find any support as it dropped against the rest of the major bloc. As the session progressed, USD/JPY continued to fall as the yen extended its gains on the day. The pair touched a low of 111.63 with E-minis falling to a low of 0.8% on the session.
That resulted in further bids in the Swiss franc as well with USD/CHF starting the session around 0.9900 before falling to a low of 0.9848 on the day. As we close out the session, US equity futures are paring some of its earlier losses and with that the yen and swissie are also a little off their highs. USD/JPY now sits close to 111.90 while USD/CHF holds around 0.9860 ahead of US trading.
As the dollar failed to gather any momentum from haven bids, the euro, aussie, and kiwi took advantage of that as they pushed forward against the greenback on the day. EUR/USD started the session on the back foot around 1.1550 with the euro dragged lower from the pound's woes. But that quickly turned as risk sentiment started to sour and the pair rose to 1.1575 before tailing off to 1.1550 and then rising back up to test the 1.1600 handle again.
AUD/USD traded more straightforward with the pair starting around flat levels at 0.7110 before gradually advancing higher to reach 0.7144 before trading close to the highs now. NZD/USD saw similar price action as it started the day around 0.6500 before touching a high of 0.6540 where it trades close to now.
One of the notable movers on the day was the pound as cable traded around 1.3110 levels early on in the day, weighed down by the weekend rhetoric that Brexit talks have come to an impasse for the time being. But cable pared losses as the dollar surrendered all of its gains on the day moving back to 1.3150 levels, before pushing to a high of 1.3182 as the pound started fading some of the negative sentiment from Brexit talks.
The two points that stand out for me in trading today is firstly the lack of bids in the dollar again despite the softer risk sentiment and that is causing for a rethink in dollar sentiment in general. Overall, that points to more headwinds ahead for the greenback with the risks of the midterms looming as well. The second point is yet to take place but it is something to watch out for instead. And that is a potential downturn in the S&P 500 index. That will be a key thing to watch out for in markets this week so make sure you pay attention to that.
