ForexLive European morning FX news wrap: Dollar steadies; markets in search of direction
Forex news from the European morning session - 4 February 2019
- Germany's Merkel: We do not want to reopen the Brexit withdrawal agreement
- Eurozone February Sentix investor confidence -3.7 vs -1.3 expected
- UK January construction PMI 50.6 vs 52.5 expected
- Jacob Rees-Mogg: Would accept Brexit deal without Irish backstop
- ECB's Nowotny: We will see an increase in core CPI
- Australia banking inquiry makes 76 recommendations; none on criminal charges
- CAD leads, JPY lags on the day
- European equities a little lower; E-minis flat on the day
- US 10-year yields up 0.9 bps to 2.693%
- Gold down 0.5% to $1,311.33
- WTI flat at $55.26
- Bitcoin down 1.2% to $3,408
There was little action in the European morning as markets held steady with the dollar having eked out some gains during Asian trading. Traders are still looking to settle on a narrative after the US jobs report last week didn't offer much else apart from reaffirming what we already know - that is the US labour market remains solid.
EUR/USD ranged between 1.1440 to 1.14460 for the most part as trading ranges for most major pairs remain relatively narrow. USD/JPY maintained its course higher trading above 109.80 but unable to take a crack at the 110.00 handle, where large expiries and offers sit.
The pound was rather lively at least with cable racing to a high of 1.3096 earlier on, moving towards a test of key near-term resistance levels around the 1.3100-10 level. But failure to test those levels saw price fall back to a low of 1.3050 - dollar strength also helped with that - before bids around the area helped to lift the pair back up ahead of US trading.
The aussie is also pressured to start the new week, falling on the back of poor building approvals data earlier. AUD/USD began the session around 0.7230 and traded between 0.7225-45 for majority of the session as the downside move stalls at the 100-hour moving average still.
The silent outperformer on the day so far is the Canadian dollar as the loonie managed to gain across the board with USD/CAD notably aiming towards a test of a key trendline support stemming from February last year after breaking below the 200-day moving average last week. The pair moved to a low of 1.3086 before inching back up to stay near the 1.3100 handle currently.
Looking ahead, we'll have US factory orders data for November - that was delayed by the shutdown - so expect that to maybe have a bit of a say in dictating dollar direction in the near-term. The data may be lagging but given risks to the dollar right now are skewed to the downside, a poor showing there could exacerbate worries about the greenback and the US economy in general.
Aside from that, just be on the watch for trade headlines and risk sentiment in general.