Forex news from the European trading session - 6 August 2020
Headlines:
- US July Challenger layoffs 263k vs 170k prior
- German health minister warns general lockdown could be imposed again if virus numbers rise
- BOE's Bailey: Negative rates are in the toolbox, but that is not the current plan
- UK July construction PMI 58.1 vs 57.0 expected
- China repeats that it will take strong countermeasures as it opposes US-Taiwan meeting
- Germany July construction PMI 47.1 vs 41.3 prior
- Full statement of the BOE August monetary policy meeting decision
- BOE leaves bank rate unchanged at 0.10%
Markets:
- GBP leads, CAD lags on the day
- European equities lower; E-minis down 0.2%
- US 10-year yields down 3 bps to 0.516%
- Gold up 0.9% to $2,056.66
- WTI down 0.9% to $41.80
- Bitcoin up 0.2% to $11,721
It was a largely quiet session as the market chopped around a little before we get to North American trading and another week of US initial jobless claims.
The BOE kept policy unchanged and reaffirmed that they are not looking at negative rates for the time being, offering some glimpses that the UK economy is holding up well in the early stages of the recovery process.
That gave the pound a slight lift, with cable rising from 1.3130 to 1.3180 before settling around 1.3150-70 with BOE governor Bailey reaffirming the central bank's stance.
European equities began with modest gains nudged higher in the opening hour before giving back all of those gains and then some in the preceding hours.
During the session, US yields also moved lower with 10-year yields seen down by over 3 bps currently to 0.516% and that is keeping the yen firmer across the board.
The dollar also held its ground after some early weakness with EUR/USD slipping from 1.1900 to 1.1830-40 levels. AUD/USD also declined from 0.7210 to 0.7175 on the session.
Meanwhile, USD/CAD moved higher from 1.3250 to 1.3300 while USD/JPY kept more defensive around 105.45 after a brief nudge to 105.70 earlier on.
Elsewhere, gold and silver are still keeping the upside momentum going with the former approaching near 1% gains in a push above $2,050. The latter is up by over 4% now and testing waters above $28 going into the session ahead.
US weekly jobless claims will be one to watch before the focus and attention shifts towards the non-farm payrolls report tomorrow. But also the market will be looking at Congress and whether or not lawmakers can get a stimulus deal wrapped up by the weekend.
