Forex news from the European trading session - 8 August 2018
Headlines:
- US MBA mortgage applications w.e. 3 August -3.0% vs -2.6% prior
- More from Conte: There is only a single government plan on the Italian budget
- Italy's Conte says budget will be 'serious, rigorous, courageous'
- China to grant foreigners more access to its capital markets
- Australia July foreign reserves AUD 69.1 bn vs AUD 75.8 bn prior
- Bank of France July industry sentiment indicator 101 vs 101 expected
- Italy's Tria reiterates that government is not questioning euro membership
- ICYMI: US to impose 25% duties on $16 billion Chinese goods on 23 August
Markets:
- JPY leads, GBP lags behind
- European equities mixed mostly higher
- Gold down 0.02% to $1,210.77
- WTI down 0.51% to $68.83
- US 10-year yields flat at 2.97%
- Bitcoin down 5.69% to $6,485
The yen made headlines early on in the session but by the end of it, the pound has stolen the show. GBP/USD falls to near one-year lows, EUR/GBP rises to nine-month highs, and GBP/JPY falls to eleven-month lows. It's a 'pound'-ing across the board.
Things started off with the dollar a little on the back foot as the yen gathered momentum with Chinese stocks moving lower into the close. Trade headlines resulted in some jitters for equities and that led to European stocks opening lower too. However, there was some recovery once Chinese markets closed shop but the yen continued to track higher and hold near the highs. Here's a couple of reasons on why that is the case.
But thereafter, it's all about the pound with EUR/GBP hitting eleven-month lows while GBP/USD broke below the 1.2900 as GBP/JPY also slipped below key technical support levels.
During the interim, the dollar pared losses against most major currencies as the session ended with further weakness in the pound.
Looking at individual currencies, EUR/USD moved to a high of 1.1628 early on as the dollar weakened. The high was just shy of the 200-hour MA @ 1.1631 at the time before falling back to lows of 1.1584 before settling near the 1.1600 level currently.
Movement in USD/JPY was more straightforward as the pair fell from 111.20 levels to approach the 111.00 figure level as the yen gathered momentum. That extended to a move towards 110.84 before the pair rebounded to stay between 110.90-10 levels for the session.
GBP/USD was the more interesting pair despite it being one-way action. The pair fell from highs of 1.2960 to settle around 1.2930 levels initially before pound weakness kicked in and sent the pair lower steadily throughout the session. Initial losses were halted near the 1.2900 level but once that gave way, the floodgates were open and we're now trading near the lows around 1.2960-70.
AUD/USD had a very quiet session with the pair trading to a high of 0.7434 on the back of dollar weakness before settling near the lows now as the dollar recovered from its losses earlier. The range for the day is 24 pips.
NZD/USD had a more interesting session with the pair having traded to a high of 0.6762 buoyed by better inflation expectations and Chinese trade data before paring those gains as the dollar rebounded to settle between 0.6730-40 levels currently.
Meanwhile, the loonie extended its losses against the dollar in a follow through of overnight action which saw USD/CAD rise above the 1.3000 level. Oil prices are also lower on the day and that is not helping the loonie as well.
In the crypto space, Bitcoin erased most of its July rally after the SEC moved to postpone its decision on ETF listing.
