Forex news from the European trading session - 18 June 2020
Headlines:
- BOE leaves bank rate unchanged at 0.10%, expands QE program by £100 billion
- US calls for China to accelerate purchases in agreed Phase One trade deal
- SNB says it has a very good dialogue with the US Treasury
- Expectation is that "real negotiations" on EU recovery fund will start next week - German official
- SNB's Jordan: There is no specific limit for currency interventions
- China CDC virus expert says that Beijing's outbreak is now under control
- Japan PM Abe: Seeking to open limited travel with Vietnam, Thailand, Australia, New Zealand
- Japan PM Abe announces that will remove restrictions on domestic travel
- SNB's Jordan: We have made substantial currency interventions since March
- SNB leaves policy rate unchanged at -0.75%
- Merkel says that expects no final decision on EU recovery fund proposal tomorrow
- US president Trump says that John Bolton's book is made up of lies, fake stories
Markets:
- JPY leads, GBP lags on the day
- European equities lower; E-minis down 0.5%
- US 10-year yields down 3 bps to 0.707%
- Gold down 0.3% to $1,721.31
- WTI up 0.4% to $38.10
- Bitcoin up 0.6% to $9,427
Central banks were among the focus points in the market today and while the SNB delivered a non-event, the BOE proceeded to expand QE by £100 billion through year-end.
The decision from the BOE saw the pound gain initially as they bolstered support for the economy and have tapered purchases, but for the most part this has been anticipated with the central bank trying to squeeze as much as they can from as little actions.
Cable tracked lower during the session from 1.2550 to 1.2476 before holding around 1.2490 going into the BOE policy decision.
The reaction saw the pound get a nudge back towards 1.2550 but gains were quickly faded as price action now starts to revisit the 1.2500 level again.
The other key focus area was equities but sentiment continues to remain more choppy for the most part during European morning trade today.
Stocks got a slight nudge higher as Beijing said that the virus outbreak in the city is now "under control" but gains were slowly faded and European indices are now lower alongside US futures, with E-minis down by 0.5% after having held around 0.2% gains earlier.
As a result, AUD/USD jumped up from 0.6875 to 0.6900 but gains were fleeting as we see price fall back to 0.6860-70 levels currently.
During the session, the ECB also announced a record take-up in its latest TLTRO programme of €1.3 trillion, resulting in a net liquidity injection of €548 billion.
But the euro hardly gave that a nudge with German officials ruling out any significant progress to be made from the European Council meeting tomorrow on the recovery fund.
EUR/USD stayed around 1.1240-50 for the most part, helped by gains in EUR/GBP, but is now seen tracking lower towards 1.1230 levels ahead of North American trading.