Forex news from the European morning session - 17 January 2019
Headlines:
- OPEC oil production falls by the most in two years on early cuts by Saudi Arabia
- Corbyn says May's offer of talks was just a stunt
- European Commission says Juncker hasn't spoken with May, but they are texting
- Andrea Leadsom: Motion on government's next Brexit steps will be put forward on 21 January
- Theresa May said to refuse to rule out no-deal Brexit option in Cabinet meeting this morning
- Eurozone December final core CPI +1.0% vs +1.0% y/y prelim
- EU's Barnier: Brexit deal is balanced, respects UK's red lines
- China says drop in December trade is due to weak global demand, waning frontloading
- China confirms that vice premier Liu He will attend trade talks in US
- Japan's Aso says aging a key policy focus for G-20 meetings
Markets:
- JPY leads, NZD lags on the day
- European equities lower; E-minis down 0.4%
- US 10-year yields down 1 bps to 2.711%
- Gold flat at $1,294.00
- WTI down 1.9% to $51.33
- Bitcoin down 0.6% to $3,583
The session started off with softer risk tones and that basically dominated much of the trading theme besides a bit of a mini-rally in the pound. Equities were nudged lower ahead of the European cash equity market open and the weaker tones helped to keep the yen bid on the session.
USD/JPY began trading around 108.90 levels but slowly tracked lower towards 108.70 levels currently as risk sentiment continues to hold weaker ahead of US trading. The negative tones also impacted risk currencies with the kiwi bearing the brunt of the beating as NZD/USD fell from 0.6760 to a low of 0.6730 before trading at 0.6740 levels now.
At the same time, softer risk tones also led to a decline in oil which dragged the loonie lower as well. USD/CAD made a run above 1.3300 mid-way through the morning but quickly retraced and trades just under the figure handle at the moment as oil continues to trade lower, down by nearly 2% on the day.
Meanwhile, the pound was looking heavy in the early morning with cable falling to a low of 1.2832 as the dollar and yen were bid from the slight risk-off sentiment. But the quid recovered well to trade back to unchanged levels at 1.2880 before getting a bit of a push higher above 1.2900 where it currently trades. There isn't any fresh headlines on Brexit to impact the pound as we continue to wait on May's "Plan B" which will be unveiled next Monday.
As for the euro, traders in the single currency lacked any imagination today with EUR/USD basically hugging the 1.1390-00 level for majority of the trading session. The lack of catalysts isn't really helping with the pair as it continues to make up its mind trading at the mid-point of the 1.13 to 1.15 range currently.
Looking ahead, the big question will be can earnings help to bolster US stocks in order to pull off a recovery in risk later today. US equity futures are trading mildly lower and the softer risk sentiment hasn't turned into a full-fledged risk-off move just yet. That will be the key area to look out for in trading later.
I'm off for a short break for the next couple of days so in the meantime I wish you all a great weekend and all the very best in your trading endeavours to come!
