Forex news from the European morning session - 5 September 2019
Headlines:
- US August Challenger job cuts +39.0% vs +43.2% y/y prior
- UK's Gove: Government will comply with Brexit delay law if it is passed by House of Lords
- Cable rises above 1.23 as pound gains continue
- Markets stay more optimistic in the European morning
- Germany August construction PMI 46.3 vs 49.5 prior
- German factory orders slump will give ECB more food for thought next week
- Brexit: The withdrawal agreement that just won't go away
- Germany July factory orders -2.7% vs -1.4% m/m expected
- Switzerland Q2 GDP +0.3% vs +0.2% q/q expected
Markets:
- GBP leads, JPY lags on the day
- European equities higher; E-minis up 0.9%
- US 10-year yields up 4.2 bps to 1.508%
- Gold down 0.6% to $1,543.01
- WTI flat at $56.28
- Bitcoin down 0.4% to $10,583
It was a bit of a quieter morning as Brexit headlines were few and far between but that didn't stop the pound from posting yet another solid session of gains as we wait for the Brexit delay bill to appear before the House of Lords.
Boris Johnson's bid for an election is all but down the drain now and the pound continues to be buoyed amid receding no-deal Brexit risks. Cable started the morning lower at 1.2210 before climbing back to 1.2260 and then surging towards a high of 1.2354.
Elsewhere, markets were more upbeat since Asia Pacific trading as US and China confirm that they are setting up trade talks for October. Equities surged alongside Treasury yields and that kept USD/JPY underpinned around 106.50-70 in the European morning.
The franc is weaker as a result and the dollar also eased against the likes of the euro with EUR/USD moving up from lows of 1.1017 after poor German data to session highs currently around 1.1065.
AUD/USD maintained gains as buyers are still struggling to break above resistance around 0.6818-22 as price sits around 0.6810-25 for the most part. Meanwhile, the kiwi extended gains from 0.6370 to near 0.6400 currently against the dollar.
Looking ahead, the risk backdrop remains one to watch ahead of the US jobs report and Fed chair Powell's speech tomorrow but keep an eye on parliamentary proceedings in Westminster as well for any surprises that could temper with the pound optimism this week.
