Forex news from the European morning session - 22 January 2020
Headlines:
- The rates market pulls back BOE rate cut pricing for next week
- Trump on auto tariffs: I have a date in my mind, it is a fairly quick date
- UK January CBI trends total orders -22 vs -25 expected
- US president Trump: The dollar is very strong
- UK's Javid: Trade deal with EU can absolutely be done before the year-end
- Mnuchin: US couldn't be more pleased with China deal
- Trump: Fed raising rates was a big mistake
- Hong Kong reports first case of new coronavirus
- Japan maintains overall economic assessment for the month of January
- US Senate sets rules for Trump's impeachment trial, adopts McConnell's plan
Markets:
- GBP leads, CHF lags on the day
- European equities mixed; E-minis up 0.4%
- US 10-year yields up 0.2 bps at 1.776%
- Gold down 0.2% to $1,555.75
- WTI down 0.7% to $57.98
- Bitcoin down 0.8% to $8,648
Markets continued to observe more caution amid the nCoV outbreak with risk reversing earlier losses from early Asia Pacific trading but not doing a whole lot else after.
Chinese equities pretty much set the tone for the session after the Shanghai Composite reversed losses of ~1% to end the day 0.3% higher. That helped to see European stocks gain before staying more tepid as Hong Kong reports its first case of the new coronavirus.
Treasury yields stayed more flat so the mixed tones didn't lend to much movement in USD/JPY as the pair traded around 109.95-05 for the most part. The franc is a little weaker though amid talk of light SNB intervention, with EUR/CHF off its lows around 1.0760-75.
The pound was the notable mover as it pushed gains after the UK CBI report showed that quarterly business optimism among UK factories improved sharply after the election to its highest level since April 2014.
That helped cable to move from 1.3160 to 1.3180 before BOE rate cut odds for next week were pared back to under 50%, resulting in a sharper move to the upside for the pound.
Cable is now sitting close to 1.3120 at the highs, testing resistance from last week's high @ 1.3118 and the 50.0 retracement level @ 1.3119.
Other major currencies didn't do a whole lot amid the more cautious mood in markets overall with the dollar keeping near flat levels against the likes of the euro, aussie and kiwi.
Looking ahead today, the loonie will come into focus as we will have Canadian CPI data before moving on to the Bank of Canada policy decision later.
