Forex news from the European trading session - 23 April 2018
Economic data:
- Switzerland March M3 money supply y/y +3.3% vs +3.7% prior
- France April flash manufacturing PMI 53.4 vs 53.5 expected
- Germany April flash manufacturing PMI 58.1 vs 57.5 expected
- Eurozone April flash manufacturing PMI 56.0 vs 56.1 expected
- SNB total sight deposits w.e. 20 April CHF 575.4 bn vs CHF 575.1 bn prior
Government/Central banks:
- Bundesbank report: German boom to continue despite weaker Q1 growth
- Azerbaijan rules out possibility of joining forces with OPEC
- Mexico expects to reach consensus on NAFTA trade deal - CNBC
- Fed's Williams: Too early to say if there is a serious risk of trade war
- CF40 researcher says China-US trade spat will be a long process
- Here's why the RBA will not raise its cash rate in 2018
Markets:
- USD leads on the day, JPY lags behind
- European equities mostly a little lower on the day
- Gold down by 0.51% at $1,328.77
- WTI dwn by 0.39% to $68.13
- US 10-year yields higher by 1.7 bps to 2.977%
- Bitcoin up by 4.4% to $8,903
The main story for the day so far has been US dollar strength. The dollar index is higher by 0.4%, touching highs last seen on 1 March - almost seven weeks - bolstered by higher yields. There wasn't much two-way action to go by as the dollar caught a broad bid across the major bloc and it has been one-way movement up until now.
EUR/USD touched a high of 1.2293 ahead of the European session but quickly faltered and continues to trade near session lows currently at 1.2230. It's been a tough session for the euro and manufacturing PMI readings continue to feed the negative sentiment on Eurozone growth as well.
USD/JPY meanwhile is the biggest beneficiary of the the dollar story as 10-year yields close in on the elusive 3% level. That has seen the pair break free of the 61.8 retracement level @ 107.87 and the pair currently trades above 108.00 for the first time in two months. The next key upside level to watch out for the pair is the 100-day MA @ 109.04.
As for GBP/USD, the pair lingered around 1.4000 for the most part but eventually fell back down after the dollar was bid. The pair took out the 1.3980 support level here and now looks set for a further downside move as expectations for a BOE rate hike dwindle down and questions are now being raised of the UK leaving the EU customs union in the event of Brexit.
Commodity currencies are the middle men of the pack, with the loonie, aussie, and kiwi lower against the dollar for the most part. The aussie and kiwi though look set to break key levels as mentioned here and here respectively, which could open further downside pain in AUD/USD and NZD/USD.
The move so far today is pretty much a continuation of last week's trading theme, where the dollar was the star performer on the week.
