Forex news from the European morning session - 10 December 2018
Headlines:
- European Commission says "we will not renegotiate" on Brexit agreement
- UK PM May is said to pull vote on her Brexit deal
- Di Maio: Italy cannot give up on key reforms in budget
- Eurozone December Sentix investor confidence -0.3 vs 8.3 expected
- UK October GDP +0.1% vs +0.1% m/m expected
- Ireland's Coveney says the Brexit deal that is there is not going to change
- UK government says no plan to revoke Article 50
- SNB total sight deposits w.e. 7 December CHF 576.4 bn vs CHF 576.9 bn prior
- Top EU court rules that Britain can unilaterally revoke Brexit
- China said to plan first batch of US soybean purchases
- Germany October trade balance €18.3 billion vs €17.1 billion expected
- Switzerland November unemployment rate 2.5% vs 2.5% expected
- Japan reported to effectively exclude Huawei, ZTE from supplying infrastructure products
- Italy's Conte reportedly seeking accord on 2% budget deficit target
Markets:
- NZD leads, GBP lags on the day
- European equities lower but off the lows; E-minis down 0.3%
- US 10-year yields up 0.7 bps to 2.852%
- Gold down 0.14% to $1,246.64
- WTI down 1.58% to $51.78
- Bitcoin up 2.32% to $3,467
Brexit, Brexit, Brexit. The soap opera in markets that just keeps on giving. The pound was the main highlight in the European morning as cable rocked to a high of 1.2760 from 1.2720 after the official ECJ ruling on Article 50 was announced, before it came crashing down to 1½-year lows of 1.2638 as Theresa May pulls tomorrow's Brexit vote.
The move higher after the ECJ ruling was short-lived as it was very much expected but still generated some algo reactions as cable moved up from 1.2720 to 1.2760 before falling back to 1.2730 in quick succession.
There wasn't much else going on in the session thereafter up until reports emerged that May has called for an emergency Cabinet meeting and then sources said that she would be pulling the vote on her Brexit deal tomorrow. Cable fell to 1.2700 when the emergency meeting was called and barely reacted initially to the vote being pulled.
But as the European Commission said that they would not renegotiate any changes to the Brexit agreement, the pound fell to 1.2660 and further worries saw it fall to a low of 1.2638 before recovering slightly to 1.2660 levels currently.
In other events, the dollar remains on the back foot for the most part following Friday's weaker-than-expected jobs report. That saw EUR/USD hold gains between 1.1405-35 for the most part in the session with other major currencies also gaining against the greenback.
USD/JPY was a decent mover on the day as well as the pair fell to a low of 112.24 during Asian trading as risk sentiment soured with E-minis falling by almost 1.0%, but as they recovered to only be about 0.3% lower now, yen pairs also managed to pull higher with USD/JPY now at 112.60 levels ahead of US trading.
Aside from that, oil remains pressured on the day falling by more than 1% to be just under $52 currently. This comes despite the fact that OPEC+ agreed to production cuts on Friday but markets appear to be skeptical on how much that would help to reduce the oversupply issue at hand. The key level to watch out for remains the $50 handle, so technically there isn't a significant move lower just yet.
Expect focus on risk sentiment to remain a key theme in trading later but also look out for more Brexit headlines as Theresa May is due to make a statement in parliament later.
