Forex news from the European trading session - 22 September 2020
Headlines:
- Ireland's Coveney: There is a growing sense that perhaps UK doesn't want a Brexit deal
- Brexit talks reportedly going 'a bit better than expected', said to have 'window of opportunity'
- Brexit: EU's Barnier reportedly heading to London for informal talks tomorrow
- UK September CBI trends total orders -48 vs -40 expected
- Global Times editor: China will not accept US demands with regards to TikTok
- BOE's Bailey: Like the Fed, BOE is flexible in returning inflation back to its target
- BOE's Bailey: We will do everything we can to support the UK economy
- EU's Šefčovič: Next EU-UK joint committee meeting set for 28 September
Markets:
- GBP leads, EUR lags on the day
- European equities higher; E-minis up 0.2%
- US 10-year yields up 1.3 bps to 0.679%
- Gold down 0.3% to $1,906.42
- WTI up 0.7% to $39.60
- Bitcoin flat at $10,488
Brexit and BOE headlines were the two things that stood out in European morning trade, as the dollar gained a little before giving all of it away during the session.
Risk began with a more mixed mood, as US futures kept lower before pushing higher over the past few hours. European indices kept a more positive tone, also playing catch-up to the late surge in US stocks from trading yesterday.
The dollar firmed initially but gains ebbed as risk sentiment held up. EUR/USD fell from 1.1765 to 1.1720 before retracing the downside move. Meanwhile, AUD/USD slipped from 0.7220 to 0.7178 but is trading back closer to unchanged levels now.
USD/JPY didn't do a whole lot as it stuck around 104.45-70 for the most part, though sellers are still keeping price under the 100-hour moving average for the time being.
The pound was a key mover as cable fell to a low of 1.2713 and testing the confluence of its key daily moving averages @ 1.2722-25, before bouncing back up to 1.2867.
The UK is set to introduce virus-related restrictions and that weighed a little on the pound before the technical bounce was helped by Bailey's remarks that negative rates may not be on the cards in the near future (though I'd take that pledge lightly).
All eyes will be on US equities once again in the session ahead, after the late surge yesterday kept dip buyers somewhat in the game to start the week.
Fed chair Powell's testimony will also be one to watch, so let's see how things go later on.
