Forex news from the European morning session 18 Jan

News:

  • OPEC still feel on the right side of their market share battle in latest monthly report
  • BOJ Osaka branch manager says geo-political risks could affect sentiment in Japan
  • BOJ Nagoya branch manager says negative impact of China is diminishing on region
  • Japan's Asakawa says fiscal consolidation is crucial
  • BOJ's Kuroda says they will continue to ease until inflation is stable
  • Japan's Abe says they are watching financial markets closely
  • China's Li sees increasing downward pressure on Chinese economy
  • France's Hollande announces new job creation measures
  • UK and Germany call for "fit for purpose" bank capital rules
  • UBS sees reduced PBOC forex intervention or else financial risks will rise
  • Bank of Canada and ECB take top billing this week
  • Brent gaps lower as Iran returns to market - Is this a short term bottom?
  • Option expiries 10am NY cut 18 Jan

Data:

  • Italy trade balance Nov EUR +4.409bln vs EUR +4.817bln prev
  • Japan nationwide department store sales Dec yy +0.1% vs -2.7% prev
  • Nikkei 225 closes down - 1.12% at 16,955.57

It's been an interesting enough start to the week albeit one that has one eye on Chinese GDP and other events this week. US Martin Luther King holiday today adding to the feeling of treading water.

There's been some moves though and after an initial dip in Asia for oil we've seen some decent recovery before capping out again. Brent based at $27.70 and has since been back to $29.58 with WTI similarly rallying to $29.84 from $28.36. Equities remain undermined despite a firmer start.The oil rally has seen a steady retreat for USDCAD to test 1.4480 support from 1.4560

It was the pound though that raised a few eyebrows just as European desks were opening up and having posted below 1.4250 cable went on a rapid flow-led rally to 1.4324 as traders rushed to cover shorts but with no obvious news to pull the trigger. This led EURGBP down to 0.7596 from 0.7640 but we saw, and have seen since, some GBP supply to reverse a large part of those moves.

Overall the euro has had a decent enough morning and with all the cross plays going through EURUSD has been trading tightly either side of 1.0900.

AUD and NZD have also been crossfire contained with AUDUSD in retreat from 0.6920 but finding support around 0.6880 and NZDUSD similarly down from 0.6480 to test 0.6440.

US holiday beckons then with markets closed. Thin conditions lead to greater volatility but today traders still at their desks will be glad for a breather.