Forex news from the European morning session - 27 August 2019
Headlines:
- UK PM spokeswoman: Johnson thinks there is enough time to agree on backstop alternative
- Brexit: Juncker and Johnson to have phone conversation later today
- Italian coalition talks risk collapsing, says PD official
- China reportedly to loosen, remove car purchase limits
- UK Finance July mortgage approvals 43.3k vs 42.9k expected
- Labour's Starmer: Legislation must be in place to stop a no-deal Brexit
- China foreign ministry says has not heard of any phone call with US on trade
- Iran's Zarif says that meeting between Trump and Rouhani is unimaginable
- Germany Q2 final GDP -0.1% vs -0.1% q/q prelim
- Brexit: Cross-party MPs to meet later today in bid to stop no-deal
Markets:
- GBP leads, NZD lags on the day
- European equities a little higher; E-minis flat
- US 10-year yields down 2.5 bps to 1.51%
- Gold up 0.2% to $1,530.47
- WTI up 1.3% to $54.32
- Bitcoin down 1.3% to $10,134
Markets were a little quieter today after the conclusion of the G7 summit yesterday. Brexit focus is beginning to creep back in following Boris Johnson's meeting with European leaders in France and as opposition parties look to band together in order to stop a no-deal Brexit.
The pound held firmer with cable steadily rising from 1.2215 to a high of 1.2271 before backing off slightly towards 1.2260 levels currently. Boris Johnson is pushing for alternatives to the backstop but it remains to be seen if any workaround would be plausible.
Meanwhile, the trade optimism is beginning to fade as bond yields hold weaker during the session. That is still keeping the yen bid overall despite some slightly more positive news for equities in the European morning.
China is reportedly considering relaxing restrictions on auto purchases and that helped to lift auto stocks in Europe.
Also, Norges Bank suggested that its sovereign wealth fund would be slashing investments in Europe and increase them sharply in North America instead. That helped to give US futures a minor boost but E-minis are more or less close to flat levels on the day still.
USD/JPY started the session at lows close to 105.60 before inching up to 105.95 and is now settling around 105.75-85 ahead of US trading.
The aussie and kiwi remain weaker on the day as the Chinese yuan traded much softer throughout the session. The onshore yuan closed domestic trading at its weakest level since February 2008 earlier today.
The dollar was more steady overall with little change observed in EUR/USD as the pair trades in just a 18 pips range on the day near 1.1100.
Looking ahead, it's still all about the risk mood for the time being so let's see if Trump will have anything to add after yesterday's remarks later on in the day.
