Forex news from the European morning session 14 Dec

News:

  • Draghi says ECB must and will bring inflation back to target
  • BOE's Shafik: Not yet convinced wage growth is at a sustainable level - Livesquawk
  • New SA fin min says he wants a resilient and inclusive economy
  • Japan's MOF says it's possible that JGB sales will decrease in 2016
  • BOJ are looking to extend funding programs
  • China will keep economy in a reasonable range in 2016
  • EU's Moscovici wants IMF involved in Greek bailout programme
  • Greece is expected to adopt second set of milestones shortly - EU
  • Germany's Merkel says Eurozone crisis is not solved yet
  • Spanish banks borrowed €135.9bln from the ECB in November
  • Asian funds responsible for GBP falling from highs
  • Option expiries 10am NY cut today 14 Dec
  • 3 things to expect this week as the Fed looks to hike rates
  • Moody's say currency flexibility supports credit quality of Asian sovereigns
  • Portugal could be in for it says S&P

Data:

  • October 2015 Eurozone industrial production 0.6% vs 0.3% exp m/m
  • Italy HICP Nov final YY +0.2% vs -+0.1% exp
  • Nikkei 225 closes down -1.8% at 18,883.42

It's been a busy start to the week with oil turning lower again taking equities and the US$ with it but the pound has also come in for another kicking

Chinese equity market rallies helped the Nikkei pare some earlier losses and had European equities in positive territory but then oil had another pop lower and put the skids under the feel-good factor

The pound had already seen some fund-based selling in Asia but had found a bit of support at 1.5180 and rallied back to 1.5200 related to option expiries. Then the euro found some love on the equity losses and we saw EURGBP renew its climb higher through 0.7235 to take out the next layer of res/offers around 0.7250 before another sharp jump to 0.7267 as BOE MPC's Shafik talked in newly dovish/less hawkish tones

That move saw GBPUSD extend its losses to 1.5116 support area and overall the pound has had a bad morning at the office so far. It's even lower against the oil-related weakening CAD despite USDCAD rallying to 1.3781 on the oil price falls after finding support at 1.3700

USDJPY had made a decent attempt to move higher and had posted 121.35 as the Nikkei pared session losses into the close and finding some EURJPY demand, but the oil price drops gave rise to safe haven demand. We've since seen USDJPY fall back to 120.67 and USDCHF to 0.9803 with EURCHF dropping to 4-week lows of 1.0770

AUDUSD and NZDUSD have both been caught up in the cross play crossfire but both suffering on the commodity softness to retreat and post 0.7196 from 0.7220 and 0.6735 from 0.6755 respectively

Thin liquidity is exacerbating some of the moves so there's plenty of opportunity to be had before the day is out