Forex news from the European morning session - 20 August 2019
Headlines:
- China won't make trade concessions if US plays Hong Kong card
- EU reiterates necessity of backstop in Brexit withdrawal agreement
- UK August CBI trends total orders -13 vs -25 expected
- Bond yields extend fall in the European morning
- Huawei founder expects no relief from US sanctions
- Boris Johnson reiterates commitment to deliver Brexit by 31 October
- Switzerland July trade balance CHF 3.63 billion vs CHF 4.10 billion prior
Markets:
- JPY leads, GBP lags on the day
- European equities mixed; E-minis flat
- US 10-year yields down 4.2 bps to 1.56%
- Gold up 0.7% to $1,507.00
- WTI down 0.5% to $55.95
- Bitcoin down 0.1% to $10,662
Markets were in a more defensive mood in the European morning as bonds gained while equities were tepid for the most part. That saw flows lean slightly towards haven assets with gold, yen and the franc gaining some ground.
USD/JPY pushed lower from 106.50 to a low of 106.30 and is settling just above that as Treasury yields were marked lower during the session. Gold also pushed back above $1,500 while USD/CHF inched below 0.9800.
Meanwhile, the pound was dragged lower as Boris Johnson's letter to the European Commission appear to have backfired. The EU labelled his letter as "misleading" and reiterated their firm commitment to the backstop in the Brexit withdrawal agreement.
Cable fell early on already from 1.2125 to a low of 1.2100 before breaching past the figure level to make lows around 1.2065-75 currently.
Other major currencies were more tepid with the aussie still holding slightly higher since Asia Pacific trading, while the loonie and kiwi are a tad weaker amid narrow ranges.
Markets are still very much choppy over the past two days as we await fresh developments and some form of direction. The key risk event this week is the Jackson Hole symposium and central bank talk so there's still much waiting to do in the mean time.
