Forex news from the European trading session - 23 October 2018
Headlines:
- Brexit: EU reportedly willing to offer Theresa May a UK-wide customs arrangement
- UK PM spokesman says that position of EU backstop proposal is unacceptable
- Italy's Di Maio: Decision on budget already made clear by EU comments
- UK October CBI trends total orders -6 vs 2 expected
- Turkey's Erdogan: Khashoggi murder was part of a planned operation
- BOJ's Kuroda said to have expressed that global stocks are showing some nervous moves
- Japan's government maintains economic assessment for the month of October
- Italy reportedly ready to make adjustments to budget if markets react negatively
- Germany September PPI +0.5% vs +0.3% m/m expected
Markets:
- JPY leads, NZD lags on the day
- European equities all lower on the day; E-minis down 1.4%
- US 10-year yields down 5.1 bps to 3.147%
- Gold up 1.27% to $1,237.55
- WTI down 1.87% to $68.06
- Bitcoin down 0.63% at $6,373
The session started off with sour risk sentiment stemming from Asia as equities continued their selloff following a poor performance by Wall St stocks overnight. Chinese equities led declines and that sparked a bit of contagion with E-minis also dragged lower, trading 1.4% in the red ahead of the cash equity market open.
The risk off mood helped keep yen pairs offered on the day with USD/JPY slipping from 112.50 to 112.15 before settling around 112.25 currently. The dollar caught a bit of a mild bid early in the session but quickly gave back those gains and struggled throughout the session.
EUR/USD slipped to a low of 1.1439 early one before recovering as the greenback slipped slowly inching to a high of 1.1486 where it trades just under now.
The most interesting price action came from the pound with cable having traded lower to 1.2937 as the dollar was bid but quickly reversed course towards a move higher and tested the 1.3000 handle. The pound's gains tapered off a little with cable falling to 1.2980 but then a late session headline saying that the EU possibly handing Theresa May a lifeline helped send cable spiking 60 pips to a high of 1.3044 with price holding on to most of those gains now.
Despite the fresh developments in Brexit, all eyes in the session ahead will still be on the US cash equity market performance. That will ultimately drive risk sentiment and in turn will be a key catalyst for moves in yen pairs most notably in North American trading.
As for commodity currencies, the loonie is still settling around the 1.3000 handle for the most part ahead of the Bank of Canada decision tomorrow. The aussie and kiwi are still finding it tough on the day with risk sentiment staying soft and lead losses as we move into the new session.
