Forex news from the European morning session - 7 December 2018
Headlines:
- OPEC meeting enters fourth hour of talks, still no progress
- CFTC Commitment of Traders report publishing delayed to 10 December
- OPEC talks are said to be in a deadlock over Iran
- UK PM spokesman says Brexit vote in parliament will go ahead as planned on Tuesday
- Iran said to want deal to include exemption but rest of OPEC disagrees
- OPEC+ said to seek symbolic commitment to output cuts from Iran
- Italy government said to now be hoping to send revised budget to EU on Wednesday instead
- Eurozone Q3 final GDP +0.2% vs +0.2% q/q second estimate
- Russia said to claim that Iran is now the main obstacle for OPEC+ deal
- Saudi oil minister says not confident that there will be a deal today
- BOE/TNS November inflation expectations 3.2% vs 3.0% prior
- OPEC+ talks said to focus on combined cuts of about 1 million bpd
- UK November Halifax house prices -1.4% vs +0.2% m/m expected
- France October industrial production +1.2% vs +0.7% m/m expected
- China says seriously concerned about reports on Huawei in Japan
- Germany October industrial production -0.5% vs +0.3% m/m expected
- BOJ's Kuroda: 2% inflation target likely to be met in FY2021 or later
Markets:
- USD leads, AUD lags on the day
- European equities higher; E-minis down 0.6%
- US 10-year yields down 1.1 bps to 2.885%
- Gold up 0.26% to $1,240.96
- WTI up 0.66% to $51.83
- Bitcoin down 5.97% to $3,381
It was a lackluster session as a whole with plenty of headlines crossing but focus of markets is on the US non-farm payrolls data to come at 1330 GMT later. Aside from that, the attention has intensified on the OPEC+ meeting in Vienna as we enter the fourth hour of talks between OPEC members but there is still no consensus being reached.
The situation now is that OPEC and Russia wants Iran to contribute to production cuts but Iran is adamant that they should receive an exemption from any production cuts deal because of US sanctions. That remains the key sticking point in talks at the moment.
There wasn't much movement in currencies as trading ranges remain narrow ahead of the payrolls data but the greenback is holding steady after some worries overnight as rate hike expectations ahead of the 19 December FOMC were scaled back. EUR/USD sits near flat levels at 1.1370 currently and traded around 1.1360-75 for majority of the session.
There was a bit more action in GBP/USD as the pair traded to a low of 1.2734 before racing back up to 1.2770 levels and now settles just under it as uncertainty continues to linger ahead of the parliament vote next Tuesday. The latest news is that May could be calling off the vote entirely right before deadline day.
Risk remains tepid despite the rebound seen in Wall St overnight as US equity futures are slumping before the payrolls data is to be released later. E-minis are down about 0.6% currently as markets await the next move to come.
The softer risk tones saw USD/JPY sit around 112.70-80 for the most part with large expiries prevailing at 112.50 and 113.00, keeping price action limited. And speaking of large expiries, there is about AUD 6.5 billion worth of them at 0.7250-60 for AUD/USD so keep an eye out for that later in the session. The currency pair remains on the lower end of the trading range hovering between 0.7205-20 for the most part as the aussie remains weak following poor sentiment since the rough Q3 GDP report earlier in the week.
It's all about payrolls now so strap yourselves in, it's going to potentially be a wild end to the week.
