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Forex News on the European morning session – July 10, 2019
Securities:
markets:
- CHF leads, NZD is late on the day
- Mixed European equities; Electronic minis down 0.2%
- US 10-year yields up 3.5 basis points to 2.10%
- Gold down 0.2% to $ 1,395.24
- WTI up 2.3% to $ 59.13
- Bitcoin up 5.2% to $ 13,042
The major currencies remain in a state of constant change in anticipation of the testimony of Fed Chairman Powell later today. The markets hope to have more Powell indexes before engaging in firm moves during the week and trading has not changed much so far.
The dollar continues after a slight weakness early, driven by higher bund yields and weak positioning. The EUR / USD reached a high of 1.1230 from 1.1210 before stabilizing around 1.1220-20 currently.
Meanwhile, the pound fell to a low of 1.2444 at the start of the session as the EUR / GBP peeked above the 0.9000 mark, but the pair found a certain balance with a cable testing a maximum of 1.2495 before falling back to almost 1.2470 – unchanged levels.
Commodity currencies also traded moderately, with little risk to market participants today. The NZD / USD quickly fell in Asian trade, falling to 0.6568 on a large sell order, before rising to levels close to 0.6590-10 in Europe.
Although Treasury yields are increasing slightly due to weaker bonds in Europe, the USD / JPY is not able to muster enough conviction to exceed the 109.00 threshold, with the price lying mainly between 108.85 and 95%.
This is to anticipate Powell's testimony in the hope that it provides clues to the markets to react. Currently, a rate reduction of 25 basis points is almost total, but the question is whether Powell will offer more or less to the markets with which to work later today.
I imagine he will continue to try to write an "insurance rate cut" in a complex wording without committing to lowering the rate to 50 basis points or possibly starting a cycle of easing. This will leave the markets a little uncertain and we will have to see how the economic data will evolve over the next few weeks. After all, the Fed is still punishing.
Remember that Powell's testimony will be made public at 12:30 GMT before he is scheduled to start testifying at 14:00 GMT today.
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