Forex news from the European trading session - 27 September 2018
Headlines:
- Barnier says that EU continues to work for an orderly Brexit
- EU says that it is ready for any scenario on Brexit
- Italy's Tria is said to have threatened to resign
- Italy's budget meeting is reported to be at 1800 GMT
- Eurozone September final consumer confidence -2.9 vs -2.9 prelim
- Germany September preliminary CPI reported to be +0.4% m/m
- Saudi Arabia and other oil producers are said to have discussed possible output increase last week
- ECB says that data confirms broad-based growth of Eurozone economy
- Eurozone August M3 money supply +3.5% vs +3.9% y/y expected
- China says its economy will not collapse under US threats
- Di Maio: If you're on the side of markets, you're against Italian citizens
- BOJ's Kuroda: Expects inflation to rise towards 2% target
- What's next for Theresa May?
- Germany October GfK consumer confidence 10.6 vs 10.5 expected
- Italy's 2019 budget meeting is reportedly delayed
Markets:
- USD leads, CHF lags on the day
- European equities mostly lower, Italy leads losses
- Gold up 0.06% to $1,195.13
- WTI up 0.96% to $72.25
- US 10-year yields down 0.4 bps to 3.044%
- Bitcoin down 0.47% to $6,466
The session started off with worries on Italy's budget meeting and that pretty much set the tone for the rest of the day so far. There wasn't much movement in Asian trading but then we had a report stating that Italy's budget meeting could be delayed and that set off a chain reaction in markets.
The euro fell initially with EUR/USD dragged lower from 1.1750 to a low of 1.1716. At the same time, cable also fell from 1.3150 to 1.3130 levels with the pound falling in tandem with the euro.
Thereafter, there were further worries as Italian budget headlines dominated the wires and that saw Treasury yields start to slip alongside equities. That prompted a more risk off tone in the currencies space as well with the aussie and kiwi quickly falling to lead losses. AUD/USD fell from about 0.7255 to a low of 0.7222. Meanwhile, NZD/USD fell from 0.6660 to 0.6634 on the back of those jitters.
At the same time, EUR/USD started to come under pressure and moved towards a test of the 1.1700 handle. USD/JPY meanwhile inched lower towards 112.60 as the yen firmed on lower Treasury yields.
Despite better-than-expected German states inflation readings, it did little to cheer up the euro on the day given that the spotlight continues to shine on Italy. The rest of the session moved along in a bit of a range with Italian headlines continuing to keep things interesting. It's now all about the wait as markets have to sit back until 1800 GMT till the budget meeting comes along.
Although, Tria, Salvini, Di Maio, and Conte will be having a separate meeting before that at 1400 GMT. So, keep an eye out for that as well.
As we move into US trading, most currencies have recovered a little from their earlier losses but the major trading theme remains. The only notable change in risk is that E-minis and Treasury yields have pared earlier declines and are almost flat on the day now. That has seen yen pairs move higher in the last hour.
