Forex news from the European trading session - 26 October 2018
Headlines:
- China said to view 7.00 as "important" level in USD/CNY, likely to intervene to stop rapid yuan fall
- ECB says forecasters lower 2018, 2019 growth outlook
- Italy's Borghi says expects S&P rating decision to be moderate
- France September PPI +0.3% vs +0.2% m/m prior
- France October consumer confidence 95 vs 95 expected
- Germany GfK November consumer confidence 10.6 vs 10.5 expected
- Italy's Bagnai says it is improper for Draghi to issue warnings over Italian banks
- PBOC deputy governor says recent yuan fall reflects market supply and demand
- Moscovici says that Italy's deviation from EU rules is unprecedented
- Some BOJ officials are said to see 10-year yields limit higher than 0.20%
- Don't forget about Italy today
Markets:
- JPY leads, NZD lags on the day
- European equities lower, E-minis down by 1.0%
- US 10-year yields down 3.2 bps to 3.085%
- Gold up 0.27% to $1,235.54
- WTI down 1.22% to $66.51
- Bitcoin up 0.30% to $6,420
The session started with notable declines in the aussie and kiwi as the Chinese yuan touched a decade low against the US dollar. Equities were hampered by the fact that earnings from Amazon and Alphabet (Google) failed to inspire further confidence in Wall Street's rebound yesterday and that led to declines in US equity futures as well as Asian and European stocks.
That led to gains seen in the yen as USD/JPY started the session around 112.15 but then moved lower to the 112.00 handle as E-minis continued their decline on the session. US equity futures extended their slide and that saw USD/JPY touch a low of 111.87 while at the same time dragging down yen pairs across the board with AUD/JPY touching a near two-year low.
But as we close out the session, E-minis are paring some of their earlier losses but is still well in the red and that sees USD/JPY climb back a little to the 112.00 handle.
Apart from risk off tones, the loonie was also weighed lower on the session moving from 1.3120 levels to a high of 1.3154 as oil prices and a stronger dollar lifted the pair. As we head into North American trading, the pair is settling higher around 1.3140 levels.
There was also notable movement in the euro and the pound as both currencies saw declines against the yen start to weigh on their overall position against the major bloc as well. Both currencies held steady against the dollar before a drop in the last two hours started to add some activity into the respective currencies.
EUR/USD now trades at a low just under 1.1340 after having held steady around 1.3170 for majority of the session and inches closer towards the year's low of 1.1301. Meanwhile, GBP/USD falls to a two-month low after having stayed around 1.2810 and now trades at 1.2780 ahead of US trading.
AUD/USD and NZD/USD pretty much stuck to their earlier declines as both currencies held onto losses and failed to recover on the day. The former trades in a 0.7020 to 0.7040 range while the latter trades in a 0.6465 to 0.6485 range so far in European trading.
Looking ahead, the first key risk event is the US advance Q3 GDP and that will be telling for dollar sentiment on the day. But right after that, all eyes and focus will turn to the US cash equity market and that will be the determining factor of how risk plays out today.
It's setting up for an exciting end to the week but also could be a rather dangerous one. Be safe out there.
