Forex news from the European trading session - 7 May 2020
Headlines:
- US Challenger job cuts hit highest single-month total on record in April
- BOE's Bailey: BOE could do more QE in June
- EU's Hogan: Despite the urgency, we're only making very slow progress on Brexit talks
- ECB's Makhlouf: German court ruling does not get in the way of the ECB doing its job
- BOE's Bailey: We are not out of monetary policy tools
- Japan says that may lift state of emergency in some areas around 14 May
- ECB's de Guindos: ECB stands ready to make further adjustments to current measures
- China repeats that US' Pompeo is lying about the origins of the coronavirus
- Top US-China trade negotiators plan phone call as soon as next week - report
- France March trade balance -€3.34 billion vs -€5.22 billion prior
- BOE leaves bank rate unchanged at 0.10%
- BOJ's commercial paper holdings jumped by nearly 30% last month
- Germany reports 1,284 new coronavirus cases, 123 deaths in latest update
Markets:
- AUD leads, JPY lags on the day
- European equities higher; E-minis up 1.4%
- US 10-year yields flat at 0.70%
- Gold up 0.5% to $1,694.33
- WTI up 9.8% to $26.34
- Bitcoin up 0.6% to $9,303
The session kicked off with more tepid tones but risk started to push higher after the BOE kept policy unchanged with two members dissenting, arguing for more QE.
The BOE did note that at its current pace, its asset purchase target will be met by July so governor Bailey reaffirmed that more action may come in June on that front.
The pound raced higher initially, with cable rising to 1.2480 from 1.2425 before steadying a little. But as the dollar moved lower on the back of another equities rally, cable rose to 1.2418 before seeing all of those gains erased in a fall back to 1.2340-50 levels.
It was very much the same case for EUR/USD as the pair nudged higher to 1.0816 before falling back to 1.0780-90 levels currently.
Risk tones were much better during the session, despite US-China tensions that have been brewing since yesterday. A Bloomberg report noted that both sides are due to speak again next week so the hope is that they will try and play nice - or at least act that way.
US futures moved higher from around 0.5% to around 1.4% currently, allowing for yen pairs to climb with the aussie and kiwi gaining strongly during the session as well.
USD/JPY moved from 106.15 to 106.60, testing waters above its 100-hour moving average now. Meanwhile, AUD/USD rose from 0.6430 to 0.6474 and is still testing the 200-hour moving average currently as buyers try to seize near-term control.
It's all about the risk mood over the coming sessions and as we have seen yesterday, mid-session rallies in US futures may not amount to much at the end of the day.
Will there be another repeat today or can investors look past the likely pessimistic reports from the US weekly jobless claims report later and the non-farm payrolls report tomorrow?
