Forex news from the European morning session - 22 March 2019
Headlines:
- Trump: If European automakers build plants in US, then there won't be tariffs
- Trump: Hopefully Fed "won't do the tightening"
- German 10-year bond yields turn negative for the first time since October 2016
- Eurozone March flash manufacturing PMI 47.6 vs 49.5 expected
- Germany March flash manufacturing PMI 44.7 vs 48.0 expected
- France March flash manufacturing PMI 49.8 vs 51.4 expected
- Goldman Sachs: Brexit delay keeps all options in play
- JP Morgan: Brexit deal no longer the most likely outcome
Markets:
- JPY leads, EUR lags on the day
- European equities lower; E-minis down 0.5%
- US 10-year yields down 4.8 bps to 2.489%
- Gold up 0.3% to $1,313.33
- WTI down 0.8% to $59.50
- Bitcoin up 0.1% to $3,978
Markets were initially calm as we began London trade but a slump in Germany's manufacturing sector sentiment helped to kick things into gear in the European morning. The euro dropped slightly after France's PMI data missed expectations but sank after Germany's factory print came in at the weakest level since August 2012.
EUR/USD traded to a high of 1.1391 early one before settling around 1.1370 and then got a jolt lower to move just below the 1.1300 handle after the release of the German data. Price now trades close to the figure level ahead of US trading.
Risk sentiment was initially muted but turned sour after Germany's manufacturing sector slump reignited global growth worries. Equities turned red as bonds rallied with Germany's 10-year bond yields falling below 0% for the first time since October 2016.
That helped to see the yen gain with USD/JPY steadily declining from 110.80 to around 110.40 currently. At the same time, the dollar also gained some ground as it pared losses against the kiwi and pound while extending gains against the aussie and loonie.
With Brexit headlines few and far between, the pound saw more choppy price action ahead of the weekend. Cable was initially trading higher as the can gets kicked down the road for another two weeks with price holding around 1.3120-30 before falling to a low of 1.3081 as the dollar advanced.
However, the pound managed to find buyers under the 1.3100 handle to move back up to hit a high of 1.3165 before settling near 1.3150 currently.
Looking ahead, risk sentiment will be a key focus for markets but we'll also have Canadian retail sales and CPI data as well as PMI figures from the US to keep things interesting as we wrap up the week.
