Forex news from the European trading session - 25 September 2018
Headlines:
- BOE's Vlieghe says that one or two rate hikes a year is probably needed
- BOE's Vlieghe says more communication can be expected as QE unwind approaches
- ECB's Praet: Biggest risk to price stability is a 'growth accident'
- ECB's Praet says Draghi's comments overnight weren't anything new
- Kuroda: US-Japan rate differential would lead to dollar rise against the yen, all other conditions equal
- France September business confidence 106 vs 105 expected
- BOJ's Kuroda says will carefully watch FX moves and its impact on the economy
- More talks of Italy keeping the budget deficit below 2%
- Germany August wholesale price index +0.3% vs 0.0% m/m prior
- BOJ's Kuroda says will take longer than expected to meet price goal
- Japan July final leading indicator index 103.9 vs 103.5 prelim
- Italy's government set to compromise on a 1.9% budget deficit - report
- China says that talks with US cannot take place under threats and pressure
Markets:
- GBP leads, CHF lags on the day
- European equities trade higher, Italy leads
- Gold up 0.17% to $1,201.15
- WTI up 0.44% to $72.40
- US 10-year yields up 1.9 bps to 3.108%
- Bitcoin down 3.47% to $6,396
The session started a little lackluster with the only currency on the move being the swissie as a result of weaker performance during Asian trading. Hints of SNB intervention maybe during thin liquidity? Either way the swissie remains pressured on the day but USD/CHF hasn't really moved much since then hovering around 0.9660 levels for the most part. But the swissie's weakness is more notable in EUR/CHF as the pair rises to its highest levels since end-August.
But as Treasury yields started to climb on the day, it kept yen pairs underpinned and with yields touching the highest levels since May it helped to push EUR/JPY and GBP/JPY higher on the day. That helped to lift the euro and the pound as well. EUR/USD moved from 1.1750 to 1.1770 on the back of that while GBP/USD rose from 1.3100 to 1.3130 levels.
Soon after the euro got a bit of a setback though as ECB chief economist played down Draghi's hawkish comments overnight and that saw EUR/USD move to a low of 1.1737 testing the 100-hour MA. The euro steadied around there and traded at around 1.1750 thereafter.
The pound continued to stay perky on the day as the quid remains underpinned from bids in GBP/JPY with Treasury yields continuing to climb higher on the day. GBP/USD slowly inched to highs of 1.3161 before settling near the highs currently at 1.3150-60.
As the session draws to a close, the euro recovered as near-term sentiment remains more bullish (stay above the 100-hour MA). EUR/USD now trades at the highs for the day around 1.1780.
There was a host of central bank speakers on the session with BOJ's Kuroda, ECB's Praet, and BOE's Vlieghe all offering comments but in general headlines have done little to move markets on the session with the focus solely on the FOMC meeting tomorrow it seems.
Other major currencies did little on the day with commodity currencies all trading in a relatively narrow range and is almost unchanged against the greenback. The yen also didn't do much although there is decent movement in the currency against the euro and the pound. Apart from that, there wasn't much else happening in the currencies space.
As mentioned, the focus is starting to move towards tomorrow's FOMC meeting and so it's tough to imagine traders getting too ahead of themselves in terms of positioning ahead of the Fed.
