Forex news from the European morning session - 27 February 2019
Headlines:
- US MBA mortgage applications w.e. 22 February +5.3% vs +3.6% prior
- ECB's Weidmann: Monetary policy normalisation is still the baseline scenario
- European Commission says Greece, Italy, Cyprus experiencing 'excessive economic imbalances'
- PBOC says to steadily resolve shadow banking risks
- Weidmann: No reason to be overly pessimistic about economic slowdown
- Eurozone February final consumer confidence -7.4 vs -7.4 prelim
- German Cabinet said to agree to extend Weidmann's term as Bundesbank president
- 'Big gaps' still said to be seen on structural issues in US-China trade negotiations
- Eurozone January M3 money supply +3.8% vs +4.0% y/y expected
- Switzerland February Credit Suisse investor sentiment -16.6 vs -44.0 prior
- ECB's Nowotny: Italy debt is a threat to the EU
- Saudi oil minister says sees likelihood of output cuts extension
- BOJ's Kataoka: Japan still a long way from end to ultra-easy policy
Markets:
- GBP leads, AUD lags on the day
- European equities lower; E-minis down 0.2%
- US 10-year yields flat at 2.634%
- Gold down 0.1% to $1,327.27
- WTI up 1.9% to $56.54
- Bitcoin up 0.6% to $3,813
The pound remains the hot story in trading today as it pushes forward with further gains ahead of the Brexit debate and vote later on the government's motion. With May having given lawmakers the option to vote against a no-deal outcome and to delay Brexit in two weeks' time (should the meaningful vote fail), she is expected to come out tops in today's agenda.
Cable started the morning treading near the lows around 1.3240-50 but slowly inched higher towards 1.3280-90 as European traders joined in on the action. Price then took a peek above the 1.3300 handle for the first time since July before racing to a high of 1.3336 and then holding just above the figure level currently.
The yen was among the key gainers ahead of European trading after tensions between India and Pakistan escalated with the latter having shot down two Indian aircraft at its border. That saw USD/JPY fall to a low of 110.36 before recovering to near 110.50 now.
Tensions between the two countries marred equities sentiment and European stocks never really recovered from that. The softer risk sentiment is seeing the aussie and kiwi a little pressured on the day with AUD/USD holding near the lows at 0.7165.
The loonie bucked that trend to post gains ahead of North American trading, getting a boost from oil as private inventory survey showed a drawdown in crude followed by comments by Saudi oil minister that there is a likelihood to extend production cuts beyond the summer. USD/CAD traded to a low of 1.3131 but is now holding around 1.3140 levels.
The euro traded in a more subdued range as it is nearly unchanged on the day against the dollar, attempting to crack the 1.1400 handle earlier before retracing slightly. As a result, the dollar is mixed against the major bloc as we await the second day of Fed chair Powell's testimony to Congress.
