Forex news from the European trading session - 24 October 2018
Headlines:
- US MBA mortgage applications w.e. 19 October +4.9% vs -7.1% prior
- EU's Tusk says that Brexiteers are 100% responsible for Irish border problem
- Heads up: Theresa May to address Tory lawmakers in parliament later today
- UK Finance September mortgage approvals 38.51k vs 39.40k prior
- Eurozone September M3 money supply +3.5% vs +3.5% y/y expected
- Eurozone October flash manufacturing PMI 52.1 vs 53.0 expected
- Germany October flash manufacturing PMI 52.3 vs 53.4 expected
- EU's Tusk says ready to convene Brexit summit when conditions are met
- France October flash manufacturing PMI 51.2 vs 52.4 expected
- France October business confidence 104 vs 106 expected
- Italy's Salvini insists that budget will not change
- Understanding the Brexit backstop problem
Markets:
- AUD leads, EUR lags on the day
- European equities mostly higher, FTSE MIB lower
- US 10-year yields down 1.5 bps to 3.152%
- Gold flat at $1,230.00
- WTI up 0.48% to $66.75
- Bitcoin up 0.53% to $6,425
The session started off with focus on risk sentiment once again. Asian equities were on the up and that helped to push yen pairs higher as things began. However, those gains were reversed towards the final hours of Asian trading and European equities also started the day with mild gains as E-minis moved lower from flat levels to as low as being 1.0% down during European trading.
That didn't do much to dent the sentiment in currencies though with USD/JPY starting the session around 112.65 before falling to 112.45 and then now ending the session near the highs once again.
There wasn't much to knock back the aussie and kiwi on the day as well with AUD/USD moving to a high of 0.7106 in early trades before slipping to 0.7085 but is ending the session near the highs as gains in iron ore prices and the lack of panic in currencies help to prop up the commodity currency.
The big story of the session has been the decline of the euro ahead of the ECB meeting tomorrow. The single currency suffered from poor economic data and a break of technical levels continued to send it lower as EUR/USD fell from 1.1460 to 1.1430 after Germany's PMI prints disappointed. The pair then made its way lower to break the 1.1400 handle and continues to threaten a move to stay below it now.
The drop in the euro dragged the pound lower as well but the quid is also facing some jitters as UK prime minister Theresa May is set to address Conservative lawmakers in a private meeting in parliament today. The continued uncertainty surrounding a possible vote of no-confidence is keeping pound traders on edge and that has helped to contribute a move lower in sterling as well. GBP/USD started the session around 1.2970 before moving to 1.2940 as the pound fell in tandem with the euro. And as we head into the closing stages, the pair continues to fall with bids at the 1.2900 handle just barely keeping the pair up for now.
Looking at the session ahead, all eyes will turn to the loonie instead with USD/CAD trading basically flat on the day ahead of the Bank of Canada rate decision. The central bank is expected to hike rates by 25 bps but it is all about the message that they will send that will determine the next directional move in the loonie.
