Forex news from the European morning session - 25 March 2019
Headlines:
- Fed's Harker: Dot plots not a commitment to what the Fed will do
- Fed's Harker says he sees one rate hike 'at most' this year
- Ifo report details add to the gloom in Germany's manufacturing sector
- Coeure: ECB not at the limit of what it can do yet on monetary policy
- ECB's Hansson: Eurozone slowdown may continue in the medium-term
- Germany March Ifo business climate index 99.6 vs 98.5 expected
- Fed's Evans: Not surprising that yield curves tend to be flatter
- Fed's Evans: Rates are at a decent place, this is a good time to pause
- Fed's Evans says has a hard time seeing strong price pressures
- Fed's Evans: May have to ease if downside risks become a reality
- BOJ's Kuroda: If long-term rates were to rise in the future, pace of rise will be gradual
Markets:
- AUD leads, GBP lags on the day
- European equities slightly lower; E-minis down 0.2%
- US 10-year yields up 2 bps to 2.46%
- Gold up 0.3% to $1,317.70
- WTI down 0.2% to $58.90
- Bitcoin down 0.2% to $3,968
Headlines on the session were generally dominated by central bank speakers but it was Germany's Ifo business survey report that gave markets a bit of a nudge before things started to reset once again.
Markets were mixed and calm to begin the European morning as traders/investors had to debate between a weaker equities sentiment seen at the start against a much calmer and better mood with bond yields holding steady.
That saw the dollar mixed against the major currencies bloc with little changes overall but a rebound in the Ifo report saw the euro gain slightly and risk tones improved for a brief period. While the headlines on the report looked optimistic, the details show that the manufacturing sector in Germany is continuing to struggle; much like the PMI data on Friday.
EUR/USD rose from 1.1300 to a high of 1.1325 before settling back lower now towards the 1.1300 handle again. German bond yields briefly jumped back to 0% before inching back lower now to -0.01% on the day.
The DAX also pared losses of about 0.4% to trade higher by 0.1% after the data release but is now sitting slightly lower again, with a similar kind of reaction seen across major European indices and US equity futures.
With bond yields steady, USD/JPY inched higher from 110.00 at the start of the session to touch a high of 110.24 and trades just under there currently. The aussie is the one leading gains as it recovered from Asian trading as AUD/USD ranged between 0.7075 to 0.7095 for the most part on the session.
The pound is the weakest performer as Brexit uncertainty continues to weigh on the currency with Theresa May's position as prime minister being called into question as support for a third meaningful vote remains non-existent. Further challenges lie ahead today with votes in parliament still to come that could shake things up even more.
Looking ahead, it will be a case of which theme US traders decide to adopt with equities looking a little softer while bond yields are pointing towards some minor recovery from Friday. Major currencies are mixed as a result and will wait on a decision on that before pursuing the next directional move.
