Forex news from the European morning session - 19 December 2019
Headlines:
- BOE leaves bank rate unchanged at 0.75%; votes 7-2
- UK PM Johnson: We will rule out any extension to the Brexit transition period
- ECB staff research shows that rates can still go much lower
- UK November retail sales -0.6% vs +0.2% m/m expected
- Chinese commerce ministry refrains from confirming if trade deal will be signed in January
- China: Phase One trade deal content to be disclosed after the deal is signed
- BOJ's Kuroda: It is appropriate to keep policy stance tilted towards easing
- China's latest tariff exclusions for US imports only covers chemical products
- China announces new tariff exclusions for US imports - report
- Recap: Trump impeachment story, where are we now?
Markets:
- AUD leads, NZD lags on the day
- European equities mixed; E-minis flat
- US 10-year yields up 3 bps to 1.947%
- Gold down 0.1% to $1,474.72
- WTI up 0.1% to $60.98
- Bitcoin up 0.5% to $7,165
There was little action in markets overall with the BOE being the key highlight of the European morning and that failed to deliver much fireworks at the end of proceedings.
The central bank kept rates on hold - as expected - but offered little else as they noted that it is still too early after the election to reserve any judgment about the UK economy and maintained their "glass looks half-empty but also maybe it is half-full" approach.
The pound had a bit of a whipsaw right before the decision with cable falling to 1.3054 but quickly moved back up to 1.3090 and then settling around 1.3120 before coming back down now to 1.3090 again - around where it was before the BOE.
Meanwhile, the aussie kept firm since Asia Pacific trading after a more upbeat jobs report and that is helping to keep AUD/USD around 0.6770-80 in general. That said, price is running into key technical resistance levels once again and that may limit gains for now.
The euro also saw a bit more choppy trading with EUR/USD running up to a high of 1.1144 from 1.1125 before failing to break the 100-hour moving average. Price has retreated since to around 1.1115-25 for the time being.
Besides that, there is little else going in on markets as the risk mood remains more mixed. Bond yields are continuing to climb higher on the week but equities are more subdued to start the day with European stocks slightly lower and US futures staying flat.
I think the most relevant headline on the session is seeing the Riksbank put a stop to its negative rates experiment after nearly five years. That may have a more pronounced impact on the central banking landscape moving forward - for the BOJ, ECB and SNB.