Forex news from the European morning session - 4 December 2019
Headlines:
- UK November final services PMI 49.3 vs 48.6 prelim
- US, China move closer to trade deal despite heated rhetoric - report
- Eurozone November final services PMI 51.9 vs 51.5 prelim
- Germany November final services PMI 51.7 vs 51.3 prelim
- France November final services PMI 52.2 vs 52.9 prelim
- Germany to tighten conditions for Huawei 5G involvement in the coming weeks
- China says will not set any timeline or deadline for trade deal with the US
- China foreign ministry: US will 'pay the price' over HK and Xinjiang bills
Markets:
- GBP leads, AUD lags on the day
- European equities higher; E-minis up 0.5%
- US 10-year yields up 1.9 bps to 1.735%
- Gold flat at $1,477.59
- WTI up 1.6% to $57.02
- Bitcoin down 1.5% to $7,218
Markets were taken for a bit of a ride today on US-China trade tensions with risk assets initially slipping as China warned against retaliation over the HK and Xinjiang bills.
USD/JPY eased from 108.60 to 108.43 as equities and bond yields tracked lower in the earlier half of the session before Bloomberg reported that the US and China are moving closer to a "Phase One" deal despite growing tensions recently.
That sparked risk trades into life as bond yields climbed and US futures spiked higher, helping USD/JPY climb to 108.79 before settling just under there now.
The aussie and kiwi failed to partake in the moves for the most part with the former weighed down by a softer Q3 GDP report earlier today. As such, AUD/USD sits only at 0.6830 levels now from a low of 0.6813 in the early morning.
The pound was also a focus story today as cable ran stops above 1.3000-10 early in the session and continued to stay perky with price now hitting fresh highs just above 1.3070.
It didn't owe to election moves as this was more of a run in flows/technicals as buyers look to build on the break ahead of next week's polling.
The dollar is trading a little mixed but is also seen weaker against the loonie with oil prices getting a healthy boost from the risk-on mood as well as speculation that OPEC+ is pursuing deeper cuts towards the end of next year in their meeting this week.
Of note, be wary of the BOC meeting decision later today but also pay attention to US data later in the session amid the constant flip flop in the trade rhetoric.
