Forex news from the European morning session - 5 June 2019
Headlines:
- Fed's Kaplan: It's too early to make judgement on rate cut call
- US MBA mortgage applications w.e. 31 May +1.5% vs -3.3% prior
- EU's Dombrovskis: Italy hasn't complied with debt criterion
- European Commission triggers disciplinary process against Italy over public debt
- Eurozone April retail sales -0.4% vs -0.5% m/m expected
- UK May services PMI 51.0 vs 50.5 expected
- German engineering orders continue to fumble amid global trade conflict
- ANZ now sees the RBA cutting its cash rate by another two more times this year
- IMF cuts China's 2019 GDP forecast to 6.2% from 6.3% previously
- Japan's Amari says that it is difficult to reach trade deal with US by August
- Japan's Amari says 99% chance sales tax hike proceeds as planned in October
Markets:
- NZD leads, JPY lags on the day
- European equities higher; E-minis up 0.6%
- US 10-year yields down 1.4 bps to 2.116%
- Gold up 0.7% to $1,334.80
- WTI down 0.9% to $52.96
- Bitcoin up 1.9% to $7,797
Currencies remain in a state of flux once again with the traders continuing to digest what to make of dollar sentiment this week amid increasing chatter about the Fed possibly leaning towards cutting rates later in the year.
EUR/USD moved up to 1.1275 early on before falling back to 1.1260 and then climbing to a seven-week high at 1.1289, threatening a break of the 100-day moving average @ 1.1276. But the pair slipped back to 1.1250-60 levels now as the movement throughout the session is largely dictated by fluctuations in the dollar itself, despite the European Commission announcing EDP measures against Italy on its debt problem.
With the dollar ranging back and forth, other major currencies also traded in similar fashion against the greenback. Most notably, the pound, aussie and loonie bounced around but are now near unchanged levels ahead of North American trading.
USD/JPY was a notable mover as the pair crept higher from 108.00 to 108.30 levels as Treasury yields pared earlier losses amid a move higher in equities. US 10-year yields fell to a low of 2.09% early on in the session but has recovered some ground to sit at 2.116% currently, with US equity futures climbing from flat levels to post gains of 0.6%.
The kiwi remains the standout performer after gaining ground in Asia Pacific trading, after RBNZ assistant governor, Christian Hawkesby, said that rates could be seen on hold at current levels for the foreseeable future. As a result, NZD/USD maintained gains around 0.6630-50 throughout the session.
Looking ahead, plenty of focus will reside on the dollar and how markets view the recent chatter about the Fed. But also risk sentiment will remain a key theme amid global trade tensions. We'll have quite a bit of US data to follow so hopefully that'll provide markets with more clarity ahead of the NFP release tomorrow.