Forex news from the European morning session - 12 August 2019
Headlines:
- UK PM spokesman: No meeting with Ireland's Varadkar has been scheduled
- US futures extend decline ahead of North American trading
- Germany's Scholz: We can manage tasks we have to fulfill without taking new debt
- China July M2 money supply +8.1% vs +8.4% y/y expected
- SNB back in the fray but franc strength may yet continue
- China FX regulator chief says does not expect disorderly depreciation of the yuan
- SNB total sight deposits w.e. 9 August CHF 585.5 bn vs CHF 582.7 bn prior
- Italy: Salvini faces some obstacles in bid for fresh elections
Markets:
- JPY leads, AUD lags on the day
- European equities lower; E-minis down 0.7%
- US 10-year yields down 6.4 bps to 1.681%
- Gold up 1.1% to $1,508.00
- WTI down 1.1% to $53.93
- Bitcoin down 4.7% to $11,307
It's all about the shifty risk mood as we begin the new week. Equities were in a buoyant mood to start the morning before finding a quick fall as markets turned more risk averse.
The bond market didn't buy into the optimism for a second and you can attribute that to the global backdrop of trade tensions and a slowing global economy.
But heightened geopolitical tensions in Hong Kong also played a part in the dour risk mood with the protests disrupting flights and also led to reports of China carrying out military exercises in Shenzhen, a city bordering Hong Kong.
USD/JPY fell from 105.40-50 to a low of 105.05 during the session as Treasury yields extended declines amid the negative risk sentiment. 10-year yields were down by about 2 bps at the start of the session but then fell to over 6 bps now at 1.681%.
That also saw the dollar gain some ground against commodity currencies with AUD/USD pushed lower from 0.6780 to a low near 0.6750 currently. Meanwhile, the loonie also held weaker due to softer oil prices with USD/CAD rising from 1.3220 to a high of 1.3250.
EUR/USD price action was more back and forth as the pair fell from 1.1190-00 to 1.1162 before leaning on key near-term support levels to hold near 1.1190 again.
The pound was among the star performers of the session as it stayed upbeat throughout the session. Cable steadily climbed from 1.2040 to a high of 1.2106 before settling around 1.2070-80 levels currently ahead of key economic releases over the next few days.
Looking ahead, it's all about the risk mood today with little on the economic calendar to shift the dial in markets. As such, be wary of potential remarks on the US-China trade situation as well as any further escalation in the Hong Kong protests.