Forex news for North American trade on June 18, 2019:
- Trump spoke with Xi, says they will have 'extended' meeting at G20
- White House: Trump and Xi discussed 'leveling the playing field'
- Draghi: Core inflation remains muted. Our inflation path is converging more slowly
- Boris Johnson: Nobody wants to see the return of infrastructure on Irish border
- Fund managers are the most-bearish they been since the financial crisis - BAML
- New Zealand dairy auction: GDT price index -3.8%
- US May housing starts 1269K vs 1240K expected
- Canada April manufacturing sales -0.6% vs +0.4% expected
- French 10-year yields hit 0%
- Merkel: There will be consequences if Iran doesn't uphold nuclear pact
- CFTC lays charges in Bitcoin trading scam that netted $147 million
- JPMorgan now expects 10 basis point cut in ECB deposit rate in Sept
Markets:
- Gold up $6.50 to $1346
- WTI crude up $2.16 to $54.09
- S&P 500 up 28 points to 2918
- US 10-year yields down 4 bps 2.05%
- NZD leads, EUR lags
The ECB was the dominant theme today as Draghi said policymakers would act "in the absence of improvement" in the outlook in a big shift from two weeks ago when he said that they would act "in case of adverse contingencies." He was asked about that and said "lingering uncertainty is by itself a materialization of risk."
The euro immediately sank to 1.1180 from 1.1240 but held there and bounced around from there to 1.1210, settling in the middle.
Part of the reason the euro didn't fall further was that the Draghi comment set off a drop in global sovereign yields. In the eurozone, French and Austrian 10s fell to zero but it had a large impact elsewhere as well with US yields hitting fresh cycle lows.
Trump also added to the risk trade with his upbeat comments on a meeting with Xi and that boosted commodity FX. USD/CAD fell to 1.3381 from 1.3430 early as oil prices rallied 4% in its best day in months. AUD/USD rebounded an earlier 5-month low to finish a quarter-cent higher at 0.6876.
Gold was once again volatile and for the second time in the past week, it rose above the Feb high of $1350 but for the second time it also failed to hold it and slipped back down to $1346 with the attention now shifting to the Fed.
Cable was soft early and hit a new 5-month low but bounced a half-cent to finish higher. The Conservative leadership vote saw the end of Raab's bid but left little impression on the market.
USD/JPY was tough because better risk appetite led to a rally to 108.68 but lower yields halved the gain to 108.40.
Overall, it was a surprisingly volatile session given that most expected extremely quiet pre-Fed trading coming in.
