Forex news from the European morning session - 17 May 2019
Headlines:
- UK government confirms that talks with Labour end without a Brexit deal
- Corbyn: Brexit talks with government have 'gone as far as they can'
- Eurozone April final core CPI +1.3% vs +1.2% y/y prelim
- China says no information about Trump-Xi meeting at G20 summit
- PBOC reportedly will not allow the Chinese yuan to weaken past 7.00 per dollar
- China reportedly would rather suspend trade negotiations if US fails to show sincerity
Markets:
- JPY leads, GBP lags on the day
- European equities lower; E-minis down 0.5%
- US 10-year yields down 1.8 bps to 2.376%
- Gold down 0.1% to $1,285.83
- WTI up 1.0% to $63.52
- Bitcoin down 6.4% o $7,190
Market sentiment remains cautious for the most part as China produced a hard stance against US, questioning the latter's sincerity in trade talks. That kept the yen on the front foot with USD/JPY mostly holding lower around 109.60-70 levels throughout the session.
However, it was the pound that was the main mover as things just get worse and worse for the quid this week. Although expected, cross-party Brexit talks between the government and Labour met its imminent collapse today and there doesn't seem to be much hope for May's withdrawal agreement bill to pass in parliament still.
Cable started the session around 1.2780 levels but fell to fresh four-month lows just before the official announcement and remains pressured ahead of North American trading, lingering near 1.2750 currently.
The dollar is mostly steady as risk sentiment is rather cautious in European morning trade with US equity futures holding weaker alongside Treasury yields. The greenback is mainly advancing against the commodity currencies as trade tensions continue to weigh on the bloc.
AUD/USD continues to sit near session lows around 0.6873-80 while USD/CAD is trading higher, testing levels near 1.3500 before backing off slightly during the session.
Looking ahead, expect traders to still focus on the ebb and flow as risk sentiment continues to be the main driver of markets currently. US-China trade tensions is still the crux of what is affecting that so watch out for potential headlines to come in the session ahead as we look to wrap up the trading week.
