Forex news from the European morning session - 3 May 2019
Headlines:
- Talks of US-China trade progress may not appear to be what it seem - report
- Theresa May said to accept that European Parliament elections will take place in the UK
- Corbyn: If there is no agreement with government, Brexit will return to parliament
- Eurozone April preliminary CPI +1.7% vs +1.6% y/y expected
- UK April services PMI 50.4 vs 50.3 expected
- Weidmann: Relief from rate tiering would be negligible
- Bundesbank's Weidmann: German growth of 0.5% this year seems very plausible
- Switzerland April CPI +0.2% vs +0.2% m/m expected
- BOE's Broadbent: One 25 bps rate rise a year would not be particularly dramatic
- Saudi oil output said to possibly rise in June but still set to stay within OPEC+ quota
Markets:
- CAD leads, GBP lags on the day
- European equities a little higher; E-minis up 0.3%
- US 10-year yields up 1.6 bps to 2.558%
- Gold down 0.1% to $1,269.82
- WTI flat at $61.81
- Bitcoin up 5.3% to $5,691
It was a calm session as markets are gearing towards the release of the US jobs report later but the dollar wasn't too shy as it advanced notably against the likes of the euro and pound. EUR/USD fell from 1.1170 to near session lows now just under 1.1150 as the single currency got no reprieve despite a bump in inflation data - albeit caused by Easter seasonality.
Meanwhile, cable continues to flirt with a break of the 1.3000 handle as buyers lost near-term control following a break below the 100-hour moving average. Local election results continue to show disappointment for both Tory and Labour parties and that potentially could scupper Brexit relations between the two moving forward.
The yen is also a notable gainer as it held firm alongside the dollar on the session. USD/JPY sits in a narrow 13 pips range between 111.41 to 111.54 as traders wait on the US jobs report for more clues later on.
Other major currencies also held in narrow ranges for the most part, with little changes across the board. All eyes turn towards the non-farm payrolls data for more clues, although there's the potential that it will fail to offer us anything new of note. But let's see if we'll get any surprises. This is my brief take ahead of the release later:
After the Fed message on Wednesday, quite frankly I don't see much prospects for the US jobs report later to give markets with a fresh perspective of what is going on in the domestic economy. Labour market conditions remain tight and a strong headline print on non-farm payrolls isn't going to offer us anything new. Meanwhile, wages data has been relatively decent as of late and if it comes in within expectations, it isn't going to change the inflation outlook all too much as well.
For me, the data is more like a litmus test whereby everyone is expecting it to hold decent/solid before going about their business to wrap up the week. The only thing to be wary about is any major surprises to the downside in the data, and that's the only thing I can see that could rattle markets before the end of today.
