Forex news from the European morning session - 18 July 2019
Headlines:
- BOJ's Kuroda says will continue with powerful monetary easing persistently
- ECB said to be studying potential revamp of inflation goal
- Ireland's Varadkar: I can see a route to a resolution on border issue
- UK June retail sales +1.0% vs -0.3% m/m expected
- EU's Barnier says ready to work on alternative arrangements for Irish border
- EU's Barnier: There will be no renegotiation of the Brexit withdrawal agreement
- Switzerland June trade balance CHF 4.10 billion vs CHF 3.41 billion prior
- ECB's Villeroy: Global economic slowdown is undeniable
Markets:
- GBP leads, CAD lags on the day
- European equities a little lower; E-minis down 0.1%
- US 10-year yields up 0.9 bps to 2.054%
- Gold down 0.4% to $1,421.51
- WTI up 0.6% to $57.11
- Bitcoin up 1.2% to $9,803
It was a session with a bit of everything as the pound gained on Brexit remarks, the euro falling on a report that the ECB is mulling over a change of its inflation target, and the yen holding firm amid weaker equities on concerns over trade and the global economy.
At the start of the session, the aussie was the lead gainer after a more steady labour market report seen in Asia Pacific trading. AUD/USD pushed highs of 0.7039 during the session and continues to stay just under there with gains limited by key resistance levels.
The pound saw gains come quickly after EU chief Brexit negotiator, Michel Barnier, commented that there is room to work on alternative arrangements to the Irish border. That saw cable jump from 1.2440 to 1.2475 and then testing key near-term resistance around 1.2485-95 in the aftermath with retail sales data beating expectations as well.
Meanwhile, the euro was trading more steady around 1.1230-40 levels before a report by Bloomberg mentioning that the ECB is considering to shift its inflation target brought the single currency to the lows for the day. EUR/USD slipped from 1.1235 to a low of 1.1205 before recovering slightly towards 1.1220 currently.
Other major currencies held more steady with USD/JPY trading between 107.70-80 levels as equities remain soft following sluggish trading seen in Asia with Japan exports seen declining for a seventh month in a row - prompting worries about the global economy.
The kiwi held firm around 0.6730-40 levels against the dollar but the loonie isn't doing much as it trades narrowly in a 23 pips range against the greenback, holding slightly weaker ahead of North American trading.
Despite the hustle and bustle in the pound and euro today, not much has changed in the bigger picture in my view. The bond market certainly shares that opinion with Treasuries looking less enthused to move around amid the fluctuation in currencies and equities today.
Looking ahead, the major focus remains on the Fed ahead of the FOMC meeting this month but also keep an eye out on Westminster whereby we'll see UK lawmakers vote on the Northern Ireland bill to potentially make it harder for Boris Johnson to prorogue parliament in order to pursue a no-deal Brexit outcome.
