Forex news from the European morning session - 8 November 2018
Headlines:
- Italy's Tria: Government committed to 2.4% deficit in 2019
- EU's Moscovici says still expecting revised Italian budget by 13 November
- British Cabinet meeting on Brexit said to be unlikely to take place ahead of next week
- China's Xi says that US should respect China's legitimate interests
- European Commission cuts 2019 growth forecast to 1.9% from 2.0%
- UK may ask Brussels for more time to cut a Brexit deal with Cabinet - report
- ECB: Eurozone economy still in broad-based expansion
- Heads up: ECB speakers to come later in the day
- France September trade balance -€5.66 billion vs -€5.83 billion expected
- Germany September trade balance €18.4 billion vs €20.0 billion expected
- Switzerland October unemployment rate 2.4% vs 2.4% expected
Markets:
- AUD leads, GBP lags on the day
- European equities mixed, mostly lower; E-minis down 0.4%
- US 10-year yields down 2.2 bps to 3.213%
- Gold down 0.15% to $1,224.75
- WTI down 0.05% to $61.64
- Bitcoin down 0.52% to $6,468
It was mostly a range-bound trading session as markets are keeping a close eye on the FOMC meeting to come later in the day. While I don't expect any fireworks to come from the Fed, it's still a risk event worth respecting as we look to round off the week. Most major currencies started the day tepidly and the dollar looked to pull ahead gathering light bids early on.
GBP/USD was the notable mover falling from 1.3125 to 1.3099 while EUR/USD fell from 1.1430 to 1.1415. But the greenback's gains were quickly erased as markets turned flat again before a flurry of Brexit headlines came about to hog the spotlight.
The notable headline was one highlighting a deal was close and that produced an algo-led reaction that saw the pound move higher for a moment. Cable jumped from 1.3115 to 1.3135 on the back of that but settled down to hit lows of 1.3088 as hopes for a November summit continue to fade. The pair now settles around the 1.3100 level ahead of US trading.
EUR/USD now trades rather flat again on the day sitting at 1.1420 levels after having touched a high of 1.1445 before moving to a low of 1.1404 and then climbing back up again. For the pair, watch out for the large expiries tomorrow as they will be of importance in keeping buyers and sellers at bay.
AUD/USD continues to hold at the highs though sitting near 0.7300 currently as the aussie remains underpinned from the buoyant Chinese trade balance data earlier. But I'd be wary of this divergence below as it's only a matter of time before the aussie is brought back down to earth:
NZD/USD now tracks back to near the highs for the day again but is facing a stern battle against key resistance levels. The pair started the session around 0.6795 before moving to 0.6780 but has climbed back up again as we await US trading.
There wasn't much action elsewhere as USD/JPY traded in a narrow range between 113.60 to 113.75 despite the fact that E-minis and European equities turned a little more negative on the day. That'll be something to watch out for in the session ahead as US equities will be the deciding factor as to whether or not yen pairs will be able to hold up on the day.
Focus now turns to the FOMC meeting to come so let's see what the Fed has in store for us in the hours to come.
