Forex news from the European trading session - 19 July 2018
Headlines:
- Japanese government maintains its economic assessment for the month of July
- EU official says that Brexit white paper is detailed but unclear
- EU's Malmstrom says US tariffs on cars would be 'disastrous'
- UK June retail sales -0.5% vs +0.2% m/m expected
- China calls Kudlow's trade dispute accusations "bogus"
- China says that it is clear who is right and who is wrong on trade spat with US
- Japan June final machine tool orders +11.4% vs +11.4% y/y prelim
- Switzerland June trade balance CHF 2.59 bn vs CHF 2.76 bn prior
- Italy's Conte says that the euro for Italy is 'irreversible'
Markets:
- USD leads, NZD lags behind on the day
- European equities lower, losses led by mining stocks
- Gold down 0.93% to $1,216.04
- WTI crude down 1.29% to $67.87
- US 10-year yields up 2.2 bps to 2.891%
- Bitcoin up 0.70% to $7,388
It's another session that is all about the greenback once again, with dollar strength the major theme in trading today. Are we set for the pump and dump when US traders come in like we saw yesterday? It sure feels like a case of déjà vu as the highs for the dollar index stalls at 95.50 today with it trading at 95.44 currently.
The session started off with a bit of stagnant price action across the board, but that soon evolved into a mild bid for the dollar and then a second wave of bids sent the dollar higher with EUR/USD slowly making its way towards 1.1600 from earlier levels around 1.1640 at the start.
Then, we had the UK retail sales report which missed estimates and sent cable lower from 1.3020 to a low of 1.2983 before it recovered to about 1.3010 levels. But thereafter, the dollar gathered further tailwind and pushed higher across the board with EUR/USD breaching below the 1.1600 level and the dollar index hitting highs for the day.
The move also saw the offshore yuan fall to its weakest levels in more than a year against the greenback.
So, everything sure sounds like a recap of yesterday's trading session no? All you have to do is replace the UK retail sales report with the inflation report. So, will we see the dollar hold on to its gains? That will be the ultimate question moving forward.
Looking at individual currency pairs, EUR/USD has just been on a constant track lower as the dollar advanced on the day making its way from 1.1640 to a low of 1.1595 before bouncing a little to trade near the 1.1600 handle now.
USD/JPY was more subdued with the pair trading around 112.80 levels at the start of the session before pushing to a high of 113.08 as the dollar flexed its muscles and now trades near the 113.00 handle.
GBP/USD was more exciting with key UK data adding some volatility to the mix, with the pair trading around 1.3060 levels at the start of the session before falling to a low of 1.3020 ahead of the retail sales report. The report missed expectations but the details weren't that bad, but even so cable fell to a low of 1.2983 before recovering some losses to 1.3010 levels. But the dollar's second wind sees the pair fall back below the 1.3000 handle and it has stayed there since.
Commodity currencies were a more straightforward trade falling across the board against the dollar in pretty direct trading. AUD/USD started the session higher with the aussie gaining on the back of the upbeat employment report in the Asian session, but soon faltered as the dollar extended higher and the same goes for the loonie and the kiwi as well.
