Forex news from the European trading session - 17 May 2018
Headlines:
- Ireland's Donohoe says 'vital period' of Brexit talks coming up before June
- Eurozone March construction output -0.3% vs -0.5% m/m prior
- Theresa May says UK will be leaving the customs union
- UK said to consider applying EU's external tariffs for time-limited period only beyond December 2020
- Italy March total trade balance +€4.5 bn vs +€3.1 bn prior
- France's Macron says that Europe is united on Iran
- Di Maio and Salvini to meet this morning to finalise government programme
- Germany's Merkel says EU ready to talk about reciprocal reduction of tariffs with US
- UK PM office dismisses report UK ready to stay in customs union - Reuters
- EU's Oettinger: Considering tariffs on US over Iran sanctions
- Five-Star and Lega government deal drops ECB debt write-off request - report
- Japan's Abe says he hopes Trump will change stance on TPP deal
Markets:
- AUD leads, JPY lags on the day
- European equities mostly higher, only Italy's FTSE MIB is lower
- Gold is down by 0.13% to $1,289.00
- WTI is up by 1.06% to $72.25
- US 10-year yields are flat at 3.098%
- Bitcoin is flat on the day at $8,293
The start of the session was all about the British pound. Earlier in the day, The Telegraph released a report saying that the UK was ready to inform the EU that it would want to stay in the customs union beyond 2021. That allowed the pound to strengthen on the day, with cable moving up to highs of 1.3569 on the day.
Then, there was a bit of a bid in the dollar as yields ticked higher with 10-year yields touching 3.12% for the first time in almost 7 years. And then news hit the wires that UK PM's office dismissing the Telegraph report earlier and that pushed the pound lower with cable falling to a low just under 1.3500.
As we head into US trading, the dollar is picking up a bit of momentum on the day despite yields falling back under 3.10%. That has helped to see EUR/USD settle back under 1.1800 currently.
USD/JPY made a run to the highs of 110.74 earlier on the back of the jump in US yields and has continued to settle near the highs as we await the US open. The CAD is one of the more steady gainers on the day with oil prices continuing to head higher, and we saw Brent crude exceed $80 for the first time since November 2014 as well.
Meanwhile, AUD remains underpinned on the back of cross buying with the NZD suffering as a result despite the positive budget announcement earlier in the Asian session.
Other than that, Italy is on the verge of officially announcing its new government but that is still weighing on stocks for a bit. There is still no details on UK PM May's meeting with EU's Tusk and Juncker either so let's see if we hear any of that later on in the day.
