Forex news from the European morning session - 4 June 2019
Headlines:
- RBA's Lowe says that weaker US dollar would complicate rate outlook
- RBA's Lowe: No reason to change inflation target band
- RBA's Lowe: Not unreasonable to expect a lower cash rate from here
- Eurozone May preliminary CPI +1.2% vs +1.3% y/y expected
- ECB's Villeroy: Rising trade tensions are the biggest threat to economic growth
- UK May construction PMI 48.6 vs 50.6 expected
- Westpac cuts mortgage rates by 20 bps, joins ANZ in not passing on full RBA rate cut
- China says it is clear that every setback in trade talks is due to US breaking consensus
- China issues warning against travel to the US
- CBA and NAB lower mortgage rates by 25 bps after RBA rate decision earlier today
- EU reportedly may propose tomorrow to start procedure regarding Italian debt
- ANZ Bank cuts key mortgage rate but doesn't pass on full RBA rate cut
- Full statement of the RBA June monetary policy meeting decision
- RBA cuts cash rate by 25 bps from 1.50% to 1.25%
Markets:
- GBP leads, CHF lags
- European equities higher; E-minis up 0.5%
- US 10-year yields up 3.8 bps to 2.109%
- Gold down 0.1% to $1,323.94
- WTI down 1.1% to $52.65
- Bitcoin down 7.8% to $7,889
Markets are continuing to lurch with indecision amid global trade tensions and sizing up prospects of a Fed rate cut this year ahead of Fed chair Powell's speech later today. Treasuries fell in Asia Pacific trading and maintained that mood as yields rose to post a decent recovery after yesterday's meltdown.
This comes amid calmer tones in equities with US futures seen up by around 0.5% ahead of the open with tech stocks rebounding. US 2-year yields are up by more than 5 bps to 1.883% while 10-year yields are up by nearly 4 bps to 2.109%.
However, that is doing little to provide currencies with a clear direction as the only notable move on the session was the dollar bouncing back and forth and then back again. The greenback gave up gains early on with EUR/USD rising to a high of 1.1277 before running into the 100-day MA and then falling off to trade around 1.1240-60 after.
USD/JPY also traded in a more subdued range around 107.90-10 with the yen barely phased by the move higher in yields so far today. The pair is creeping higher in the last hour but sits near flat levels ahead of North American trading.
The aussie was more lively as the early focus was on the RBA cutting its cash rate for the first time since August 2016. AUD/USD rose to a high of 0.6993 on the announcement but quickly fell off to range between 0.6965-90 after as traders weigh potential rate cuts to follow with the central bank leaving the door open for such a possibility.
Otherwise, there isn't much clear direction as the healthier risk tones among equities and bonds belie the cautious mood amid global trade tensions. Fed chair Powell's speech will be one that traders will look towards for more clues but just be on the look out for trade talks between Mexico and US as well.
