Forex - European Highlights - 22 July 2019

 10:00 (GMT) 22 Jul

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European Highlights

European Highlights - 22 July 2019 (0101-MYQL-C01)

22 July 2019

Asia FX and News

+ EU Preps Aid for Ireland to Soften a No-Deal Brexit ~ Times

+ U.K.'s Hammond Says He'll Resign If Johnson Becomes Premier ~ BBG

+ USD/JPY edged higher into the daily fix, had a look above 108 before hovering right below. The move is likely underpinned by markets paring back expectations of a 50bps Fed cut next week following Friday comments from leading Fed dove Bullard insisting that a 25bps cut was sufficient and saying he does not favour ending the balance sheet run-off early. Yen remains soft despite regional equities broadly in the red amid Iran tensions and tapering of views on 50bps cut. PM Abe's victory in the upper house election seen is seen as firming the prospects of the sales tax hike scheduled for October to be implemented as planned, but the widely expected outcome had minimal impact on the yen. NZD under bid tone with no clear trigger. NZD/USD eyes 0.6791 highs, while AUD/NZD dropped below 1.04, to the lowest since March. AUD/USD stuck around 0.7040.

Nikkei and JGBs -

+ Nikkei -0.23%, JGB 10yr yield at -0.137%

Europe FX and news

+ GBP weakness was the main feature of the European morning session. While there was no obvious trigger for the decline, the resignation of foreign office minister Alan Duncan coming after most of the decline in GBP, the expectation of more ministerial resignations this week after the expected announcement of Boris Johnson as the new Prime Minister is enough to create some nerves in GBP after the rally in the second half of last week. The comments from the NIESR indicating the costs of a "no deal" Brexit and estimating it as a 40% probability - somewhat higher than the general assessment - may also have weighed.

+ The USD was otherwise little changed after its stronger performance in late NY on Friday and Asia overnight. The JPY was the best performer even though the weakness of equities late on Friday following Bullard's comments was partially reversed through the morning.

Bonds and equities

+ Fairly quiet morning for bonds. European bonds supported into the start of ECB week, gilts also a bit defensive (-1.5bp) ahead of likely Johnson PM confirmation. US short end remains around the yield rebound highs, 1.83%-, after Fri's Bullard comments and DJ article pointing to -25bp rather than -50bp. Brent up around $1.5 off the lows after the tanker issue.


NL: Consumer Confidence (Jul) index (Prev: 0)

NL: Consumer Spending (May) % y/y (Prev: 1.8)

IS: CPI (Jul) % m/m (Prev: 0.4)

IS: CPI (Jul) % y/y (Prev: 3.3)

Still to be released

12:30 GMT - CA: Wholesale Sales (May) % m/m (Prev: 1.7)

Events & Auctions:

09:30 GMT - DE: Bills Auction (EUR 2bln)

10:00 GMT - BE: Tap of OLO 06/29 (EUR 1.5bn)

10:00 GMT - BE: Tap of OLO 4/33 (EUR 1bn)

15:30 GMT - US: 3mth Bills Auction

15:30 GMT - US: 6mth Bills Auction

22:30 GMT - AU: RBA's Kent speaks in Sydney

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