Forex news from the European morning session - 30 January 2020
Headlines:
- BOE's Carney: UK recovery appears to be on track
- Key takeaways from the BOE policy statement today
- BOE leaves bank rate unchanged at 0.75%; votes 7-2
- India and Philippines confirm first cases of the new coronavirus
- Germany January unemployment change -2k vs 5k expected
- Saxony January CPI -0.6% vs +0.6% m/m prior
- USD/CNH rises above 7.00 as risk aversion deepens
- Thailand says that it is monitoring 135 possible cases of the new coronavirus
Markets:
- GBP leads, AUD lags on the day
- European equities lower; E-minis down 0.5%
- US 10-year yields down 2.4 bps to 1.56%
- Gold up 0.3% to $1,580.80
- WTI down 2.3% to $52.09
- Bitcoin up 0.2% to $9,370
The pound was the main mover but that came late in the session as cable moved up from 1.3025 to 1.3095 as the BOE kept its bank rate unchanged in a 7-2 vote.
The currency was initially weaker to start the session, falling to 1.2978 against the dollar before recovering to 1.3025 as traders try to grapple with BOE pricing ahead of the decision.
The BOE offered a slight dovish hold - however you want to call it - by keeping rates unchanged but tweaking its guidance and lowering its growth and inflation outlook. But with rates pricing near 50-50 going into the decision, the pound found some relief thereafter.
Looking ahead, it is going to be all about the data to gauge if the BOE will follow through with possible easing with the UK budget announcement in March also one to be mindful about as it could give the central bank more leeway to stay put.
As for the rest of the market, the focus remains on coronavirus concerns as the risk mood continues to stay softer. Risk aversion continues to be the name of the game and that is seeing equities weighed lower while bonds are staying bid.
USD/JPY sits lower at around 109.80 with the the likes of the aussie and kiwi gradually being dragged lower as the risk-off tone reverberates across markets still.