Forex news from the European morning session - 31 October 2019
Headlines:
- US October Challenger job cuts -33.5% vs -24.8% y/y prior
- Eurozone Q3 preliminary GDP +0.2% vs +0.1% q/q expected
- Eurozone September unemployment rate 7.5% vs 7.4% expected
- Eurozone October preliminary CPI +0.7% vs +0.7% y/y expected
- China reportedly said to doubt long-term trade deal is possible with Trump
- ECB's de Guindos: Monetary policy hasn't reached its limits
- North Korea reportedly fires unidentified projectile towards East Sea
- BOJ's Kuroda: Global economic recovery being delayed by half a year more
- BOJ's Kuroda: Won't hesitate to ease further if risks rise
Markets:
- JPY leads, AUD lags on the day
- European equities lower; E-minis down 0.3%
- US 10-year yields down 3.3 bps to 1.738%
- Gold up 0.7% to $1,506.50
- WTI down 0.9% to $54.55
- Bitcoin down 0.7% to $9,119
It was a session that saw markets busy digesting the post-FOMC vibes before a wave of risk aversion hit as a report by Bloomberg highlighted that China is casting doubts over a larger trade resolution with the US in the long-term.
As the news hit, the yen gained ground with USD/JPY easing from 108.60 to a low of 108.13 as we are seeing currently. Equities turned lower and bond yields were also dragged down on the headlines as risk trades get a bit of a reality check on the week.
The aussie saw its earlier gains quickly erased while the kiwi also fell off slightly from earlier highs, though the euro and pound were more steady overall.
The dollar recovered some ground against the commodity currencies but continued to struggle against the rest of the major bloc as month-end flows are also at play today.
Notably, cable is continuing to run hot as the pair moves up from 1.2925 to 1.2950-60 levels during the European morning.
In the grand scheme of things, I think the US-China report earlier is sort of stating the obvious in the sense that a "Phase One" deal resembles more of a temporary truce.
The details over the past few weeks showed that China was making loose and vague promises over more structural issues and the report today serves to reaffirm the fact that we are still miles and miles away from any kind of major trade resolution.
Looking ahead, be wary of more potential US-China trade headlines to follow (a potential rebuke perhaps?) with markets still busy digesting the Fed decision overnight ahead of non-farm payrolls data tomorrow.
