Forex news from the European morning session - 17 December 2019
Headlines:
- How can China deliver on its pledge to purchase more US agricultural products?
- UK December CBI trends total orders -28 vs -25 expected
- RBA's Harper: Rushing to cut raters further could have risked overstimulating the economy
- UK October average weekly earnings +3.2% vs +3.4% 3m/y expected
- ECB's Rehn: Below-target inflation warrants accommodative monetary policy
- China to grant more regular tariff waivers for US farm imports - report
- Brexit: It's back!
- Boris Johnson reportedly weighs structural overhaul of the House of Lords
- (ICYMI) One of China’s richest province saw $1.6b in bond defaults this year
Markets:
- CHF leads, GBP lags on the day
- European equities lower; E-minis down 0.1%
- US 10-year yields down 1.4 bps to 1.857%
- Gold up 0.2% to $1,478.85
- WTI up 0.4 to $60.42
- Bitcoin up 0.4% to $6,903
It is all about the pound this morning as the currency gave up gains from the election last week with Boris Johnson offering a stark reminder of the possibility of a no-deal Brexit.
The pound found itself on the back foot early on with cable lingering around 1.3260-70 before quickly plunging below 1.3200 as stops get taken out during the session. The low hit 1.3156 and price has seen chopped around 1.3170-10 since then.
The drag in cable helped to give a minor lift to the dollar as long positions see some unwinding, and that pushed the greenback higher in particular against the commodities bloc. AUD/USD lost notable ground - falling from 0.6865 to 0.6845-50.
The overall risk mood is also more tepid and cautious, leaving little for risk trades to work with after some decent gains posted in trading yesterday. US futures are keeping more flat with European equities weaker while bond yields are little changed on the day.
The euro is finding itself underpinned as the EUR/GBP complex is helping to support gains in the single currency on the day. EUR/USD is looking to secure a break above its 200-day moving average @ 1.1153 and that will be a key spot to watch out for later.
Looking ahead, focus will remain on the pound today as things get a little dicey with traders honing in on the Brexit focus a lot earlier than expected. The election result will seem like a distant memory now as the prospect of a no-deal Brexit returns.
