Forex news from the European morning session - 3 June 2019
Headlines:
- Trump: Many firms are leaving China for other countries, including the US
- Saudi oil minister says confident of OPEC+ deal extension beyond June
- Boris Johnson: "If I get in, we'll come out with a deal or no-deal by 31 October"
- UK May manufacturing PMI 49.4 vs 52.2 expected
- SNB total sight deposits w.e. 31 May CHF 578.2 bn vs CHF 578.6 bn prior
- Treasury yields continue to bleed as 2-year yields fall to lowest since December 2017
- China issues warning on risk of studying overseas after US visa limits
- Switzerland May CPI +0.3% vs +0.3% m/m expected
Markets:
- NZD leads, JPY lags on the day
- European equities lower; E-minis down 0.3%
- US 10-year yields down 1 bps to 2.114%
- Gold up 1.0% to $1,317.90
- WTI up 1.4% to $54.24
- Bitcoin up 0.2% to $8,520
Markets are sending a bit of a mixed message to start the new week with major currencies trading at odds with what the equities and bond markets are saying. Global trade tensions continue to be the name of the game as equities and bonds displayed more cautious tones in the European morning.
Treasury yields came off rapidly at the start of the session, with 2-year yields slipping by 8 bps to its lowest level since December 2017. But as the session progressed, sentiment improved with 2-year yields down by nearly 5 bps now with 10-year yields only down by 1 bps as we look towards North American trading.
As such, USD/JPY moved lower from 108.30-40 to 108.15 before recovering some poise as the dollar bounced around to near 108.40 currently. The easing of risk aversion also saw the franc retreat with USD/CHF having fallen to a low of 0.9955 before moving back up to around 0.9980-90 currently.
The aussie and kiwi are the standout performers as they trade at their highs for the day, with AUD/USD inching up from 0.6940 levels to just above 0.6960 now. Meanwhile, NZD/USD climbed from 0.6540 to trade near 0.6570 currently as the dollar softens.
Commodities are a key spot to watch today as gold continues its run higher amid global trade tensions, whereas oil threatened a bear market in trading early on before recouping losses as Saudi Arabia reaffirms that an extension of the OPEC+ output cuts deal is looking increasingly likely ahead of the meeting at the end of the month.
Looking ahead, we'll have to wait and see what Wall Street has to say on the situation today as market participants continue to figure out a clear direction. Eventually, either currency traders or bond traders will be right so let's see who wins out.
