Forex news from the European morning session - 22 May 2019
Headlines:
- Fed's Bullard says wouldn't rule out a rate cut later this year
- US MBA mortgage applications w.e. 17 May +2.4% vs -0.6% prior
- Brexit: Cabinet ministers reportedly say they can't back May's new deal
- Chinese president Xi: We should defeat various domestic, foreign risks and challenges
- UK April CPI +0.6% vs +0.7% m/m expected
- UK's Gove: Government will 'reflect over the next few days' on withdrawal agreement bill
- China urges US to provide fair and non-discriminatory environment for Chinese firms
- Fed's Bullard: China selling US Treasuries not as big a threat as it is made out to be
- BOJ's Harada: Central bank could extend forward guidance if it needed to ease more
- BOJ's Harada says that raising sales tax now risks causing a recession
- Fed's Bullard: Rate cut may become 'a more attractive option' if inflation keeps disappointing
- US reportedly weighs blacklisting of up to five Chinese surveillance firms
Markets:
- CHF leads, GBP lags on the day
- European equities lower; E-minis down 0.4%
- US 10-year yields down 1.1 bps to 2.415%
- Gold up 0.1% to $1,275.76
- WTI down 0.9% to $62.55
- Bitcoin down 3.3% to $7,814
Markets remain cautious throughout the session as the US is said to mull blacklisting of up to five Chinese surveillance firms, as tensions between US and China continue to linger ever since trade talks broke down two weeks ago.
Despite a calmer session for the most part, equities are now softer and Treasury yields are also a little weaker and that is helping the likes of the swissie and yen to benefit from the situation. USD/JPY sits lower around 110.40 and has been ranging between 110.36-50 throughout the session on the more cautious risk mood.
However, the currency that is stealing the spotlight in the European morning is the British pound as it extends its decline over the past two weeks as May's Brexit deal is dead on arrival despite her hard sell overnight. Cable fell to fresh four-month lows of 1.2641 from around 1.2700 at the start of the session.
There's plenty of talk that May could even be ousted right after the European Parliament elections this week, so keep an eye out on headlines regarding that as well. The 1922 Committee is set to meet later at 1500 GMT so there's an added risk event for today.
Besides that, other major currencies were much calmer with little change seen on the session. The aussie and kiwi bounced back and forth in a narrow range as markets look to try and settle on a firm risk direction. Meanwhile, the loonie is a quiet outperformer with USD/CAD slipping below the 1.3400 handle as sellers chase a downside break now.
Looking ahead, risk sentiment is still the key factor driving markets in general but Brexit headlines will keep the pound interesting as we navigate through the trading day ahead of the release of the FOMC meeting minutes later.
