ForexLive European FX news wrap: Dollar regains poise on risk retreat

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Headlines:

Markets:

  • USD and JPY lead, AUD lags on the day
  • European equities lower; S&P 500 futures down 0.4%
  • US 10-year yields down 5 bps to 3.646%
  • Gold flat at $1,959.58
  • WTI crude down 2.6% to $67.67
  • Bitcoin down 2.4% to $27,121

It was an eventful session as there were a couple of broad market themes playing out in European trading today.

For one, the dollar resumed its bid from last week as it advanced across the board despite falling yields once again (it was the opposite yesterday). Poor China data from Asia trading earlier sort of set the tone for a more risk-off mood in Europe and that was certainly the case with the greenback gaining ground alongside the yen.

Equities fell as such and even with lower inflation figures in France, Italy, and German states, it wasn’t enough to turn the tide.

Instead, it was a typical flight to safety with commodity currencies and oil being offered. Despite a stronger dollar, gold held its ground as it seems like haven bids are helping out.

Going back to FX, EUR/USD declined from 1.0710 to 1.0660 before holding around 1.0680 now. Meanwhile, GBP/USD also fell from 1.2390 to 1.2350 with USD/CHF even moving up by 0.5% to clip the 0.9100 level on the day.

But it was against the commodity currencies where the dollar did most of its work, with AUD/USD down 0.6% to 0.6475 and NZD/USD down 0.6% as well to test the 0.6000 mark. Both pairs are down to their lowest levels for the year, threatening a further downside break.

WTI crude is keeping down by nearly 3% on the day as China’s worries weigh on demand prospects, testing waters below $68.

Month-end trading is also in focus, so just keep an eye out ahead of the London fix later in case we do get another injection of volatility.

This article was written by Justin Low at www.forexlive.com.

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