Forex - European Highlights Monday January 20 2020


 11:06 (GMT) 20 Jan

  [Forex Highlights]

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European Highlights Monday January 20 2020 (0101-QHGG-C01)

European Highlights

January 20 2020

Asia FX and News:

+ China 1-year Loan Prime Rate Unchanged at 4.15% vs. expected 4.10%; 5-year LPR Remains at 4.8% as expected.

+ GBP slightly softer on the week's open after UK chancellor Javid told businesses that the UK economy will not stay close to the EU after Brexit. GBP/USD has recovered back above 1.30, while EUR/GBP stood firm above 0.8530.

+ China 1-year loan prime rate unexpectedly remains unchanged. The dip in Chinese equities and consequently AUD/USD was short-lived. AUD/USD moved off Friday's lows, but remain capped below 200dma.

+ Supply disruptions in Libya and Iraq over the weekend lifted oil prices. USD/CAD erased the modest dip on the open, back to flat at 1.3066. EUR/NOK a touch lower.

Nikkei and JGB:

+ Nikkei +0.18%, JGB 10yr yield at 0.011%

Europe FX and news

European Highlights Monday January 20 2020 (0101-QHGG-C01)

+ Very little news and very little FX movement in Europe ahead of the US holiday.

+ There was an initial slight extension of GBP weakness after the Javid comments at the weekend, but this was mostly reversed by the end of the morning, and EUR/GBP is settling in the centre of a 0.8490-0.8580 range.

+ The EUR remained on the weak side after the closing weakness seen on Friday, with EUR falling to a new low for the year against then USD at 1.1082, without any significant news trigger. German PPI was as expected at -0.2% y/y.

+ USD/CAD reversed late Asia losses, rising back to 1.3070 after opening up around 1.3055 in Europe, helped by the oil price reversing half the overnight gains.

+ AUD also turned lower after overnight gains, hitting its lowest level since Jan 10 in line with a decline in equities.

+ EUR/CHF continued to test recent lows. Still no evidence of significant intervention from the SNB, with sight deposits up CHF1.3bn in the week to January 17.

Bonds and equities

+ Some interest in the partial Libya oil shutdown Monday morning, but yields were little changed in early European trading. The sense remains that this is unlikely to deliver a long lasting boost to oil prices. Key focus remains recovery hopes, with focus on PMI later this week. 10yr Bund yields remaining choppy in a -0.20 to -0.23 range. News over the weekend dampens economic hopes, with Chancellor Javid comments on regulatory divergence having upset key business sectors and thus likely to dampen business investment. Growing expectations of a cut at the January 30 meeting, though we still see a 50/50 chance as we expect PMI to bounce later in the week.

Data

UK: Rightmove House Price Index (Jan) 2.3% m/m ( Prev: -0.9)

UK: Rightmove House Price Index (Jan) 2.7% y/y ( Prev: 0.8)

JP: Industrial Production (Nov F) -8.2% y/y ( Prev: -8.1)

JP: Capacity Utilisation (Nov) -0.3% m/m (Prev: -4.5)

07:00 GMT - DE: PPI (Dec) % m/m (Mkt: 0 Prev: 0)

07:00 GMT - DE: PPI (Dec) % y/y (Mkt: -0.3 Prev: -0.7)

08:00 GMT - ES: House Transactions (Nov) % y/y ( Prev: -1.5)

08:15 GMT - ES: Manufacturing PMI (Dec) ( Prev: 47.5)

Still to be released:

23:50 GMT - JP: Industrial Production (Nov F) % m/m (Mkt:Prev: -0.9)

Events

00:00 GMT - US: Martin Luther King Day


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