Forex news from the European trading session - 21 June 2018
Headlines:
- ECB's Weidmann says ending QE is first step of multi-year normalisation
- Markets feeling a bit jittery as Italian bond yields spike
- SNB's Maechler says CHF is a safe haven and can quickly come under pressure
- Saudi Arabia says oil output increase of 1 million bpd is a good target to work with
- Italian assets spoil the mood in Europe
- SNB's Jordan says keeping an eye on ECB policy
- UK May public sector net borrowing +£3.4 bn vs +£4.9 bn expected
- SNB's Jordan says CHF is still highly valued, still seen as safe haven
- SNB leaves sight deposit interest rate unchanged at -0.75%
- Ireland's Coveney says UK has been negotiating with itself on Brexit
- Iraq says it favours keeping current oil output deal through year-end
- ECB's Villeroy says more confident heading in the right direction on inflation
- Switzerland May M3 money supply +2.9% vs +3.3% y/y prior
- France June business confidence 106 vs 106 expected
- Switzerland May trade balance CHF 2.76 bn vs CHF 2.29 bn prior
- BOJ's Funo says price growth is slowing recently
Markets:
- USD leads, GBP lags behind on the day
- European equities lower, Italy MIB leads losses
- Gold down 0.38% to $1,262.96
- WTI down 1.46% to $64.76
- US 10-year yields down 3 bps to 2.91%
- Bitcoin down 0.27% to $6,731
The session started off with very straightforward trading with the greenback staying bid and the dollar index inching above the October resistance at 95.15. European markets opened with a hint of optimism following US trading overnight with only the DAX slightly weighed down by the fact that Daimler issued a profit warning which resulted in the autos sector falling to begin proceedings.
Then, we had the SNB and they left rates unchanged as expected but upgraded this year's inflation forecast. Jordan and co continued to reiterate that the swissie remains 'highly valued' while keeping the pledge to intervene in the market if necessary. Nothing too new there but then we got news of two euroskeptic appointments to Italy's parliament and that resulted in a spike in Italian bond yields which gave the market a bit of a scare.
Equities pared gains, Treasury yields fell, and the yen gained some traction as investors got spooked out a little. The dollar stayed bid regardless, and inched even higher on the day with euro and sterling falling to year's lows against the greenback during the session.
EUR/USD traded around 1.1540-50 levels for the most part early on but the Italian news sent it tumbling and fell to a low of 1.1509 on the day - just shy of the 1.1500 figure level where barriers are reported to be sitting.
As for GBP/USD, it's been a steady track lower ahead of the BOE meeting later as the pair started the session around 1.3150 before falling to a low of 1.3102 on the day and continues to trade near there now.
USD/CAD is one of the more quiet pairs on the day despite the fact that OPEC headlines look to confirm an output increase by tomorrow - which sent oil prices lower on the day. WTI fell to a low of $64.34 earlier but has recovered a little as the session draws to an end. USD/CAD meanwhile still trades near the highs at 1.3323 now but sits in a 34 pips range on the day.
Apart from that, the aussie is one of the surprising gainers on the day with the currency staying bid as buying in AUD/NZD continues to prop up the pair and pin down the kiwi after the New Zealand GDP figures earlier in Asian trading.
All eyes now turn to the Bank of England at the top of the hour so let's see what Carney and co has to offer to the market when the time comes.
