Forex news from the European morning session - 21 December 2018
Headlines:
- No signs of Trump backing down as shutdown looms
- ECB is said to be increasingly worried by China's economic slowdown
- UK Q3 final GDP +0.6% vs +0.6% q/q prelim
- China says to keep prudent monetary policy next year
- ICYMI: Mnuchin says that market reaction to Fed is "completely overblown"
- France November consumer spending -0.3% vs 0.0% m/m expected
- France December business confidence 102 vs 102 expected
- France Q3 final GDP +0.3% vs +0.4% q/q second estimate
- Japan's Okamoto: Expects BOJ to examine options and act as appropriate
- Germany January GfK consumer confidence 10.4 vs 10.3 expected
Markets:
- JPY leads, NZD lags on the day
- European equities lower; E-minis down 0.3%
- US 10-year yields down 1.6 bps to 2.790%
- Gold flat at $1,259.80
- WTI down 1.02% to $45.42
- Bitcoin up 0.31% to $4,005
The session started off with lackadaisical movement across major currencies with the dollar a little lower for the most part. EUR/USD raced to a high of 1.1474 before the dollar reversed course and gathered strong bids on the day. In a swift move, EUR/USD fell to 1.1420 levels before trending lower now to near the 1.1400 handle. The euro's losses are also not helped by reports that the ECB may push back its rates guidance for next year.
As the dollar caught a bid, equities sentiment also dropped with E-minis slipping by 0.7% after earlier losses of about 0.3%. The greenback pushed higher notably against risk currencies with AUD/USD dropping from 0.7110 to 0.7072 before recovering back to 0.7090 levels currently.
Meanwhile, NZD/USD was already trading weaker at 0.6760 but that extended to the downside to 0.6724 as the dollar gained. The pair now sits around 0.6740 ahead of US trading.
USD/CAD also saw some decent action as the pair tracked around 1.3500 before hitting session highs now around 1.3540 as oil prices continue to fall on the day.
As for USD/JPY, the pair began the session at the highs of 111.46 but then tracked lower to a low of 111.05 as equities sentiment soured a little before pushing up to 111.20 levels now with E-minis paring some of its earlier losses.
Looking at the session ahead, plenty of focus will be on equities and risk once again. And more so now as Trump is seen refusing to back down from what appears to be an imminent government shutdown. But do be reminded that thinner liquidity conditions may prevail so expect price action to be a little jumpy.
Anyway, I'd like to wish all of our readers a great weekend ahead and to those celebrating, a Merry Christmas and happy holidays to everyone!
