Forex news from the European morning session - 19 March 2019
Headlines:
- EU leaders said to plan contingent offer on Brexit extension
- Germany's Merkel: I will fight to the last minute for an orderly Brexit
- China said to consider excluding Boeing 737 MAX jets from trade deal
- Germany March ZEW survey current situation 11.1 vs 13.0 expected
- Eurozone January construction output -1.4% vs -0.4% m/m prior
- UK January average weekly earnings +3.4% vs +3.2% 3m/y expected
- Germany says its key demand is that there not be a no-deal Brexit
- UK's Barclay: You either have a deal, no-deal or no Brexit
- UK's Barclay: Speaker's ruling makes it unlikely vote will be this week
- Switzerland February trade balance CHF 3.13 billion vs CHF 3.04 billion prior
Markets:
- CAD leads, AUD lags on the day
- European equities higher; E-minis up 0.2%
- US 10-year yields flat at 2.603%
- Gold up 0.4% to $1,308.27
- WTI up 0.6% to $59.47
- Bitcoin down 0.2% to $3,964
It was a session bereft of major headlines to really drive market direction but there were a couple of Brexit stories to set up expectations ahead of the EU Summit set to take place on Thursday this week. Despite John Bercow ruling out MV3 overnight, word on the street is that May is still preparing for one next week regardless and it is said that European leaders will work towards approving an extension right before deadline day on 29 March.
Hence, there will be no decision on any Brexit extension made this week as the European Union looks set to give May up until next week to try and hash things out with the DUP to try and get a third deal passed in parliament.
Cable steadily climbed from 1.3260 to a high of 1.3311 with the dollar also holding weaker but once again, resistance and offers around 1.3300 helped to cap gains as price settles back to near 1.3280 currently.
The dollar's weakness was the overwhelming theme on the session as markets are beginning to focus on the FOMC meeting decision tomorrow. Expectations are for the Fed to reiterate their 'patient' cue and possibly lower its dot plots projections.
EUR/USD rose from 1.1340 levels to a high of 1.1362 before trading around 1.1350 levels currently. Meanwhile, the likes of the swissie, yen and loonie also advanced modestly against the greenback as a result. But between each other, major currencies are very much lacking in direction ahead of North American trading.
The aussie is the weakest performing major currency on the day as it deals with struggles from lower yields. Australia's 3-year bond yields fell below the RBA's cash rate for the first time since 2016 and that is breeding negative sentiment in the aussie today. AUD/USD traded between 0.7090-00 for the most part in the European morning.
Looking ahead, risk sentiment appears to be more positive with auto makers leading the charge in Europe so that is something to watch out for in the session ahead. It could help to underpin yen pairs but take note that there is a host of expiries for USD/JPY between 111.35-50 that could just keep the pair sticky until they roll off later at 1400 GMT. Otherwise, expect markets to pay attention to tomorrow's FOMC meeting decision instead so we could be in for a bit more of a lull until then.
