Forex news from the European morning session - 8 August 2019
Headlines:
- Saudi official says that recent concerns about oil demand growth are "overplayed"
- China says that it opposes unfair treatment of Chinese firms by the US
- Options market still siding with more yen and franc strength down the road
- ECB: Prolonged uncertainty is dampening economic sentiment
- Bank of France July industry sentiment indicator 95 vs 96 expected
- Japan July economy watchers survey current conditions 41.2 vs 43.6 expected
Markets:
- AUD leads, CAD lags on the day
- European equities higher; E-minis up 0.4%
- US 10-year yields down 2.5 bps to 1.708%
- Gold down 0.2% to $1,497.61
- WTI up 1.7% to $51.97
- Bitcoin up 0.2% to $11,890
Markets are in a much calmer mood since Asia Pacific trading, after the PBOC fixed the yuan weaker beyond 7.00 per dollar but not as weak as many had expected. That allowed the currency to gain some ground and saw risk assets nudge higher.
Equities held more steady while gold remains tepid around the $1,500 handle. In the currencies space, the aussie leads gains with AUD/USD sitting just under a high of 0.6790 - also helped by better Chinese exports data in July.
The dollar remains somewhat mixed as it trades rangebound against the likes of the euro, pound and swissie. EUR/USD inched higher to 1.1228 before settling back near unchanged levels around 1.1200. Likewise, GBP/USD also climbed to a high of 1.2182 before falling back off to near 1.2150 levels currently.
Despite calmer risk sentiment, Treasuries are still holding firmer with yields moving lower during the session. 10-year yields are down by 2.25 bps to 1.708% currently and is putting a bit of a drag in USD/JPY as the pair inches just below the 106.00 handle.
Looking ahead, it looks like markets are taking a bit of a breather after the hectic start to the week but bonds are cautioning against risk assets from getting too carried away.
The risk mood remains somewhat defensive in my view as the market focus remains on the US-China trade rhetoric for the time being. As such, expect more choppy trading similar to yesterday to stay the course as we look to wrap up the week over the next two days.
