Forex news from the European morning session - 29 November 2018
Headlines:
- ECB says that downside risks to global growth outlook is more pronounced
- EU's Oettinger expects US car levies to come before Christmas - report
- Italy's Salvini says not discussing to cut deficit target by more than 0.2%
- UK October mortgage approvals 67.1k vs 64.6k expected
- UK PM May: Analysis shows the negotiated Brexit deal is the best deal
- Germany November unemployment change -16k vs -10k expected
- EU's Barnier: This is the only possible Brexit deal
- Spain November preliminary CPI -0.1% vs +0.1% m/m expected
- Saxony November CPI -0.1% vs +0.2% m/m prior
- France October consumer spending +0.8% vs +0.6% m/m expected
- France Q3 GDP second estimate +0.4% vs +0.4% q/q prelim
- DUP's Foster: We believe there is a better way forward
- China hopes US can meet them halfway in talks
- Switzerland Q3 GDP -0.2% vs +0.4% q/q expected
- EU reportedly could give Italy more time before EDP measures are taken up
- US 10-year Treasury yields fall to fresh two-month lows
Markets:
- JPY leads, GBP lags on the day
- European equities mostly flat, paring earlier gains; E-minis down 0.4%
- US 10-year yields down 4.3 bps to 3.015%
- Gold up 0.39% to $1,225.94
- WTI down 0.76% to $49.91
- Bitcoin up 3.00% to $4,348
Markets started off with a bit of a post-Powell hangover but the early mover was seen in Treasuries with 10-year yields falling to fresh two-month lows and that drove USD/JPY to a low of 113.21. Yields then broke below the 3% threshold briefly but that failed to drive any further decline in yen pairs and didn't exacerbate further worries in the dollar despite Powell's purported dovishness overnight.
The dollar started a little sluggishly as lower yields weighed on the greenback with EUR/USD rising to a high of 1.1398 while GBP/USD raced to a high of 1.2850. However, the fallout was short-lived as the dollar recovered some poise with EUR/USD falling to 1.1370 and GBP/USD notably declining heavily to 1.2880 in a quick break to the downside.
There wasn't any particular headlines to attribute the move to but once again it highlights the volatility and fragility of the pound as we head towards the meaningful Brexit vote in parliament on 11 December. Cable then fell lower to 1.2756 before trading close to 1.2770 currently.
EUR/USD also saw further declines after European Commission's Oettinger was reported to expect auto tariffs to kick into effect before Christmas. Although it was later denied - as expected - the report was enough to kick EUR/USD to a low of 1.1349 before recovering to 1.1370 levels currently.
USD/CAD continues to threaten an upside break after the decline yesterday as oil prices continue to slump ahead of the OPEC+ meeting next week. Oil broke below the $50 handle in a quick move lower and that helped to lift USD/CAD to a high of 1.3313 before settling close to the 1.3300 handle at the moment.
As we close out the session, risk is starting to turn sour once again as E-minis are falling to a session low moving down by 0.4%. European equities have also pared majority of their gains on the day now while Treasury yields continue to sit near the bottom ahead of US trading. USD/JPY though hasn't responded too much and now trades at 113.30 levels.
