Headlines:
- EUR/USD continues to grind higher, closes in on April high
- Gold Technical Analysis – Safe haven flows boost the precious metal
- Oil jump eases a little as traders deliberate Middle East tensions
- How have interest rates expectations changed after the US CPI report?
- China says have already issued some rare earth export licenses
- China will always honour its commitments, says foreign ministry
- Boeing shares fall after plane crashes in India
- US embassy in Baghdad advises US citizens not to travel to Iraq
- ECB’s Muller: Inflation likely to stay around 2% in the near future
- ECB’s Schnabel: Monetary policy cycle is coming to an end
- More from ECB’s Schnabel: Eurozone core inflation still elevated, but on a good path
- ECB’s Simkus: The ECB has arrived at neutral level of rates
- ECB’s Villeroy: No fixed position on future rate decisions
- UK April monthly GDP -0.3% vs -0.1% m/m expected
- German economy now expected to grow by 0.3% this year – Ifo
Markets:
- CHF leads, USD lags on the day
- European equities lower; S&P 500 futures down 0.6%
- US 10-year yields down 3.5 bps to 4.378%
- Gold up 0.7% to $3,376.19
- WTI crude down 1.9% to $66.83
- Bitcoin down 1.7% to $107,051
Key headlines on the session were few and far between but the market moves were rather decent in European trading today.
China offered up very little details and only affirmed Trump’s word that a deal is “done”. The communication from Beijing was subtle but they ensured to refer to this as a ‘framework’ more than anything else. In any case, we’re still yet to see their official take on the matter – if we will even get any.
As such, there’s still much ambiguity about what was agreed upon and how will things progress from here.
Besides that, Middle East tensions continue to run high but the US and Iran will at least sit down on Sunday to talk again. So, that will hold off any major escalation in tensions at least until the weekend.
That being said, markets took to the session in a more risk-off mood. The dollar is the main casualty as it slumped across the board against the rest of the major currencies bloc.
EUR/USD raced higher to briefly clip the 1.1600 level and is still holding around 1.1590 now, up 0.9% on the day. USD/JPY fell off to 143.75, down 0.5% on the day, while USD/CHF is marked down by 0.9% to 0.8130 as well.
Even the antipodes are turning things around with AUD/USD now seen up 0.2% to 0.6515 after having struggled earlier around 0.6480 levels at the start of the session.
The drop in the dollar comes alongside equities this time with European indices turning lower in morning trade. The DAX is down a little over 1% while the CAC 40 is down 0.7%. US futures were not spared as well with S&P 500 futures down 0.5% with the Dow down 0.6% as Boeing shares tumble after its 787 model – carried by Air India – suffered a tragic crash in Ahmedabad.
As traders digest the risk mood and Middle East tensions, oil is seen dropping back today while gold is pushing up and benefiting from the messy mix of developments. In the bond market, yields are all lower and that’s reaffirming a more defensive risk approach as we get to US trading later.
This article was written by Justin Low at www.forexlive.com.
