Forex news from the European trading session - 25 August 2020
Headlines:
- It is all about keeping up appearances when it comes to US-China trade talks
- Ifo expects German GDP growth of around 7% in Q3
- Germany August Ifo business climate index 92.6 vs 92.1 expected
- Germany Q2 final GDP -9.7% vs -10.1% q/q prelim
- Early ruling sees Apple spared from reinstating Fortnite on its App Store
- PBOC official says that China's monetary policy direction will not change
Markets:
- GBP leads, JPY lags on the day
- European equities higher; E-minis up 0.4%
- US 10-year yields up 3 bps to 0.685%
- Gold up 0.1% to $1,931.40
- WTI up 0.5% to $42.81
- Bitcoin down 1.0% to $11,618
The more optimistic tones surrounding US-China trade talks reverberated in European morning trade today, and that keeps risk in a better spot to get the week going.
European equities firmed and maintained gains throughout, with US futures also nudging higher on the session. Bond yields crept higher, with 10-year Treasury yields seen advancing by 3 bps to 0.685% and that in turn put pressure on the Japanese yen.
Even with the dollar keeping softer, USD/JPY rose from 106.00 to 106.50 and that underscores the fall in in the yen on the session. EUR/JPY climbed from 125.20 to 126.00 while GBP/JPY also pushed higher from 138.80 to 139.90 in the European morning.
Elsewhere, EUR/USD pushed higher with a more upbeat German Ifo report also helping to maintain the more positive risk tones on the session. The pair rose from 1.1810-20 to 1.1843 with cable also seen rising from 1.3100 to 1.3140.
Commodity currencies maintained a modest advance against the greenback, with AUD/USD seen moving up fro 0.7160 to near 0.7180 while USD/CAD fell from 1.3230 to levels just under 1.3200 as we look towards North American trading.
It is all about the more positive risk tilt for now but expect the market to keep the focus on the anticipation towards Fed chair Powell's speech on Thursday, not to mention month-end flows that will play a role along the way in trading this week.
