Forex news from the European morning session - 9 November 2018
Headlines:
- Italy's Tria: 2.9% deficit estimate by the EU is not justified
- UK Q3 GDP data shows rebound but is still overshadowed by Brexit
- UK September manufacturing production +0.2% vs +0.1% m/m expected
- UK Q3 preliminary GDP +0.6% vs +0.6% q/q expected
- DUP's Wilson says May's Brexit letter is not delivering on promises to Northern Ireland
- Ireland's Varadkar: Sees earliest Brexit summit at the end of November
- Borghi: EU used made-up numbers in judging Italy's budget
Markets:
- JPY leads, CAD lags on the day
- European equities lower, E-minis down 0.6%
- US 10-year yields down 3 bps to 3.207%
- Gold down 0.46% to $1,218.39
- WTI down 1.52% to $59.75
- Bitcoin down 0.94% to $6,359
The session started off with tepid tones in risk as Asian equities were hurt by the poor showing from Wall St overnight, owing to the Fed which reiterated its commitment to hike at every other meeting. The poor sentiment in equities led to bids in the yen while weighing on commodity currencies for the most part. Meanwhile, the dollar held firm extending gains from overnight as well into the new day.
USD/JPY started the session around 113.90 falling from highs of 114.09 earlier before slipping to a low of 113.76 as risk continued to deteriorate throughout the session. The pair now trades around 113.85 ahead of US trading.
The big story in markets for the session is oil as the negative risk sentiment saw oil prices tumble with Brent breaking below $70 and WTI falling below $60 in a sharp drop. That led to USD/CAD moving up to a two-month high closing in on the 1.3200 handle from around 1.3070 levels earlier.
The pound also saw some volatility as it got hit by more Brexit headlines with the DUP now claiming that they may not back Theresa May in a parliamentary vote next week. That sent cable down to a low of 1.2995 after having traded around 1.3020-30 for the most part. The pound wasn't really helped by Q3 data as business investments declined for a third straight quarter (the first time that has happened since 2009). Cable traded around 1.3000-20 thereafter but now moves back up to be around 1.3035.
Meanwhile, EUR/USD traded lower on the back of dollar strength and the euro was also weighed down by the pound's weakness a little. The pair moved from 1.1340 levels at the start of the session to a low of 1.1327 before recovering to 1.1350 currently.
The aussie and kiwi both traded lower against the dollar but never really threatened a major break to the downside as price action remains a little subdued for both pairs during the day. AUD/USD is pretty much ending where it started around 0.7245. NZD/USD is a marginally higher from where it started the session now at 0.6749 having traded close to 0.6740 for the most part earlier.
