Forex news from the European morning session - 18 April 2019
Headlines:
- Japan's Motegi says he may travel to US next week to meet with Lighthizer
- UK March retail sales +1.1% vs -0.3% m/m expected
- Eurozone April flash manufacturing PMI 47.8 vs 48.0 expected
- Germany April flash manufacturing PMI 44.5 vs 45.0 expected
- France April flash manufacturing PMI 49.6 vs 50.0 expected
- Japan's Suga: No change to government view on raising sales tax
- North Korea says it doesn't want US' Pompeo to be its dialogue counterpart
- Switzerland March trade balance CHF 3.18 billion vs CHF 3.13 billion prior
Markets:
- JPY leads, NZD lags on the day
- European equities mixed; E-minis down 0.1%
- US 10-year yields down 3.4 bps to 2.556%
- Gold up 0.1% to $1,275.52
- WTI flat at $63.76
- Bitcoin up 0.5% to $5,245
Disappointing data from Germany and the Eurozone in general is once again the main talking point in the European morning, as sluggish PMI prints saw the euro tumble dragging risk sentiment alongside it. Although the latter is showing minor signs of a recovery, the single currency continues to sit in the doldrums ahead of North American trading.
EUR/USD slipped from 1.1290 to a low of 1.1243 but is now finding a base around 1.1250 levels. Meanwhile, the sluggish data reignited global growth worries and prompted haven flows resulting in a bid in the dollar and yen.
USD/JPY fell to a low of 111.77 but is back higher now to near 111.90, close to where it started on the session. Meanwhile, risk currencies such as the aussie, loonie and kiwi were brought lower with AUD/USD falling from 0.7180 to 0.7155-65 and NZD/USD slipping from 0.6725 to session lows currently just under 0.6700.
As risk-off flows picked up, equities sentiment slumped alongside bond yields but the former is seeing some reprieve now with some major European indices sitting in positive territory. Bond yields are also off their lows but are still much weaker on the day and that is keeping the yen bid for the time being.
There was also the release of UK retail sales data, which beat expectations handily, but that failed to really ignite any spark in the pound. Cable moved up from 1.3010 to 1.3030 but surrendered those gains quickly and is now flirting with a break of the 1.3000 handle.
Looking ahead, expect risk flows to be a key focal point as we have US retail sales data to come but also just be wary of position squaring as most major European markets will be closed tomorrow and on Monday in conjunction with the Easter holidays.
For those taking time off, I wish you a very pleasant Easter break!
