Forex news from the European morning session - 6 June 2019
Headlines:
- IMF reportedly sees the euro as undervalued, ECB policy support still necessary
- Germany May construction PMI 51.4 vs 53.0 prior
- China says will have to adopt necessary countermeasures if US decides to escalate trade tensions
- Trump: China wants to make a deal, Mexico wants to make a deal badly
- Trump: Tariffs on China could be raised by another $300 billion if necessary
- Trump says Mexico has to 'step up to the plate'; progress being made
- Di Maio: Italy won't heed EU call for debt cuts
- Germany April factory orders +0.3% vs 0.0% expected
- EU's Dombrovskis: Italy needs substantial deficit correction for 2019 and 2020
- Switzerland reportedly to fine banks $91 million over FX market collusion
Markets:
- JPY leads, CHF lags on the day
- European equities higher; E-minis up 0.3%
- US 10-year yields down 3.5 bps to 2.100%
- Gold up 0.5% to $1,337.05
- WTI up 0.3% to $51.85
- Bitcoin up 1.0% to $7,813
Markets remain in a mixed mood as equities quietly gained during the session, shrugging off global trade tensions while Treasury yields continued to fall as we move towards North American trading. Currencies are little changed on the day but the yen holds firm after gaining in Asia Pacific trading as US-Mexico trade talks failed to reach a compromise.
USD/JPY touched a low of 108.07 early on but hovered around 108.10-20 levels thereafter as large expiries and indecision among traders about the market mood didn't really inspire much movement in the European morning.
It's very much a battle between bonds and stocks now as to who is wrong and who is right, as traders weigh up global trade tensions and prospects of the Fed moving towards cutting interest rates later in the year.
The dollar remains slightly on the back foot throughout the session but is little changed against the major currencies bloc in general. EUR/USD hovered between 1.1225-40 for the most part as traders wait on the ECB for more clues on how to proceed next.
Meanwhile, cable inched lower to 1.2669 before recovering some ground to trade close to the 1.2700 handle again but is generally little changed on the session. Commodity currencies are also barely changed against the dollar with AUD/USD sitting at 0.6977 but trapped in a 19 pips range for the day so far.
Once again, it's over to Wall Street to decide on how to proceed next as we should be in store for some good two-way trading action to come later on.
