Forex news from the European trading session - 20 August 2020
Headlines:
- ECB: Recent positive market developments not fully backed by economic data
- European Commission close to agreement on coronavirus vaccine deal with CureVac
- ECB, BOE, BOJ, SNB announce further change to Fed swap lines
- Switzerland July trade balance CHF 3.38 billion vs CHF 3.22 billion prior
- The virus crisis cut US share buybacks by almost half in Q2
- Germany reports 1,707 new coronavirus cases in latest update today
- RBNZ says extends term of lending facility from 3 now to 5 years
Markets:
- CHF leads, NZD lags on the day
- European equities lower; E-minis down 0.3%
- US 10-year yields down 2.7 bps to 0.652%
- Gold up 0.6% to $1,939.60
- WTI down 1.0% to $42.50
- Bitcoin up 0.5% to $11,769
There wasn't much notable headlines on the session, as we moved through another quiet and choppy trading day in European morning trade this week.
Major central banks decided to change up existing swap lines with the Fed, reducing 7-day operations. The change isn't too significant as these operations tend to see little to no bids these days in any case, but it does take some 'insurance' away.
The dollar traded a little firmer early on, following the reversal from yesterday but is now sitting in a mixed position as the risk mood stays slightly more defensive.
European indices opened softer and kept lower for the most part, with US futures also seen lower during the session although losses have been trimmed a little.
As such, the yen and franc are among the lead gainers with USD/JPY moving down from 106.05 to 105.85 while USD/CHF is down near 0.9100 from 0.9150.
EUR/USD traded choppily, moving around 1.1840 to a low of 1.1812 before climbing back to 1.1840-50 levels as buyers defended a test of the 200-hour moving average.
Cable also saw more choppy price action, slipping from 1.3090 to 1.3065 before climbing back to session highs now around 1.3140-50 as buyers wrestle back some control.
The aussie and kiwi remains on the defensive throughout, with AUD/USD seen around 0.7145-70 for the most part in European morning trade.
Looking ahead, we'll be getting US weekly jobless claims once again but the risk mood and dollar momentum flows will be key factors to watch ahead of the weekend.
