ForexLive European morning FX news wrap: Markets in a risk-off mood amid lingering US-China tensions

Author: Justin Low | Category: News

Forex news from the European morning session - 23 May 2019

Headlines:

Markets:

  • JPY leads, GBP lags on the day
  • European equities lower; E-minis down 0.9%
  • US 10-year yields down 2.5 bps to 2.357%
  • Gold up 0.3% to $1,277.12
  • WTI down 1.6% to $60.45
  • Bitcoin down 2.9% to $7,609

EOD 23-05
Markets are settling into a bit of a risk-off mood as US-China trade tensions continue to weigh on risk sentiment in general, with the situation surrounding Huawei not really helping. China continues to draw a hard line on their stance and with the US not offering any leeway, both sides are still seen heading towards a full blown trade war at this point.

European equities are dragged lower alongside US equity futures, while Treasury yields remain heavy with 30-year yields having fallen to their lowest level since January 2018. As a result, the yen is well bid with USD/JPY slipping from 110.20 to near the 110.00 handle.

The softer risk mood is also helping to keep the likes of the dollar and swissie bid, with a slightly softer tone seen in the likes of the aussie and kiwi. The euro had to navigate through PMI data earlier in the session but basically went through unscathed with EUR/USD hovering around 1.1140, after having briefly hit a low of 1.1129 during the session.

Meanwhile, the pound remains on the back foot as UK political worries continue to weigh on the currency. May's future is still very much up in the air as Cabinet ministers are pressuring her to resign and even the UK parliament business for the week of 3 June did not indicate a WAB vote as it remains to be seen if she will still be in office at the time.

Cable fell from 1.2650 to test bids around 1.2600-10 before recovering some ground now to near 1.2640. The loonie is also a quiet underperformer on the session as USD/CAD buyers find a resurgence from overnight trading to bid up the pair from 1.3440 to 1.3470 levels earlier before backing off slightly now.

Looking ahead, risk sentiment remains the key in trading today so look towards US stocks for more clues on how to navigate through the trading day in the session to come.


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