Forex news from the European morning session - 26 June 2019
Headlines:
- Loophole may clear the path for the ECB to purchase more state debt - report
- Wilbur Ross: US is looking for reasonable deal with China over trade
- US MBA mortgage applications w.e. 21 June +1.3% vs -3.4% prior
- BOE's Carney: If headwinds in the economy lift, higher rates would be appropriate
- BOE's Carney: Tightness in UK labour market has been feeding through into pay growth
- BOE's Carney: It's more likely we would provide stimulus than tighten policy after no-deal Brexit
- Mnuchin says that US-China trade deal is 90% complete
- UK Finance May mortgage approvals 42.4k vs 41.0k expected
- US and North Korea are said to be holding 'behind-the-scenes' talks over a third summit
- Germany July GfK consumer confidence 9.8 vs 10.0 expected
Markets:
- NZD leads, JPY lags on the day
- European equities slightly higher; E-minis up 0.4%
- US 10-year yields up 3.4 bps to 2.019%
- Gold down 1.4% to $1,403.78
- WTI up 1.9% to $58.91
- Bitcoin up 11.2% to $12,637
It was a quiet session for the most part with the dollar holding steady up until US Treasury secretary, Steven Mnuchin, came out to say that a trade deal with China is about '90% complete'. That helped to lift risk trades and pushed USD/JPY higher from 107.40 to highs now around 107.70 levels.
Despite his remarks being a repeat of what was said in April, it gave us a taste of what to expect ahead of the Trump-Xi meeting at the end of this week. US equity futures rose to post gains of 0.5% and Treasury yields also climbed higher as a result.
Meanwhile, the dollar continues to hold steady as markets await more US data later on. EUR/USD sits near flat levels in a narrow range, bouncing between 1.1360-70 for the most part during the European morning.
Cable was more interesting as it fell to a low of 1.2663 early one before jumping to a high of 1.2707 amid month-end and quarter-end flows.
The kiwi remains the standout performer as the RBNZ held its OCR at 1.50% earlier today. Despite a more dovish message, the decision is still helping to give the kiwi a lift alongside better risk sentiment as NZD/USD holds near highs above 0.6680 currently.
Looking ahead, we'll have US data to come later but as we move closer to the weekend, markets will remain more and more focused on the Trump-Xi meeting as that will have bigger repercussions for markets moving forward.
