Article Highlights

  • Swiss trade balance: 4.07B CHF vs. 2.88B CHF expected , 3.51B CHF previous
  • French flash manufacturing PMI: 49.6 vs. 50.2 expected, 50.2 previous
  • French flash services PMI: 51.2 vs. 49.5 expected, 49.2 previous
  • German flash manufacturing PMI: 50.4 vs. 50.8 expected, 50.5 previous
  • German flash services PMI: 55.5 vs. 55.0 expected, 55.3 previous
  • Euro Zone flash manufacturing PMI: 51.4 as expected vs. 51.2 previous
  • Euro Zone flash services PMI: 54.0 vs. 53.3 expected, 53.3 previous
  • German IFO current conditions: 113.8 vs. 112.7 expected, 112.9 previous
  • German IFO business climate: 106.7 vs. 106.0 expected, 105.7 previous
  • U.K. CPI m/m: 0.2% vs. 0.4% expected, -0.8% previous
  • U.K. CPI y/y: 0.3% vs. 0.4% expected, 0.3% previous
  • U.K. core CPI y/y: 1.2% as expected, same as previous
  • U.K. public sector net borrowing: £6.5B vs. £5.4B expected, -£14.4B previous
  • German ZEW current conditions: 50.7 vs. 53.0 expected, 52.3 previous
  • German ZEW economic sentiment: 4.3 vs. 5.4 expected, 1.0 previous
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Tight trading conditions persisted during today’s morning London forex session, even though there were a ton of economic reports. The pound and the euro were on the move, however, but that was probably thanks to safety concerns over the possible terrorist attacks in Brussels earlier.

Major Events:

Explosions in BrusselsAt least two explosions rocked the departure hall of Brussels airport earlier in what seems to be a terrorist attack, according to Belgian authorities. Several people were reportedly killed in the explosions, and the Belgian government has shut down public transport in Brussels. Another explosion was later reported at the Maelbeek metro station in Brussels, which is close to some E.U. buildings, namely the E.U. headquarters. No reliable reports on the number of casualties yet.

Risk appetite nowhere in sight – Risk appetite was chased away (and hopefully will come again another day) during today’s morning London session, and practically all market analysts were pointing to the explosions in Brussels that I mentioned earlier, with travel and leisure companies naturally being the main losers that dragged European equities lower.

The pan-European FTSEurofirst 300 was down by 0.595 to 1,331.95 while the DAX was down by 0.41% to 9,908.00. Britain’s FTSE 100 was also down by 0.56% to 6,150.00. Even U.S. equity futures took a hit, with the S&P 500 futures down by 0.36% to 2,035.00 and Nasdaq futures down by 0.41% to 4,398.25 during the morning London session. The safe-haven gold was doing well, though, since it was up by 0.60% to $1,251.70 per troy ounce during the session.

Moody’s gloomy mood on the U.K. – The well-known ratings agency Moody’s released two reports for the U.K. today. The first report was released earlier during the late Asian session, and Moody’s expressed in that report that there were “clear downside risks” should a Brexit occur, which could lead to a downgrade for Britain’s “stable” rating.

The other Moody’s report was released during the morning London session. Moody’s warned in that report that Britain is too slow in reducing its fiscal debt, citing last week’s budget proposal, especially the “significant downward revision” to Britain’s economic forecasts. Moody’s then said that “[t]his is credit negative, given that the UK still has one of the largest budget deficits among its EU peers,” which implies that Moody’s may downgrade the United Kingdom’s AA1 credit rating.

Major Currency Movers:

EUR & GBP – Most currency pairs were either imprisoned in tight ranges or had choppy forex price action, but both the euro and the pound were noticeably weak, even before the London forex session opened. This was likely due to jitters over the explosions in Brussels, although the two reports from Moody’s was probably weighing down on the pound as well since the pound was more vulnerable to its forex rivals and EUR/GBP was even up by 19 pips (+0.23%) to 0.7852 during the morning London session to boot.

EUR/USD was down by 21 pips (-0.19%) to 1.1218, EUR/AUD was down by 42 pips (-0.28%) to 1.4758, EUR/CAD was down by 19 pips (-0.18%) to 1.0885

GBP/USD was down by 54 pips (-0.38%) to 1.4289, GBP/CAD was down by 65 pips (-0.35%) to 1.8702, GBP/AUD was down by 90 pips (-0.48%) to 1.8801

Watch Out For:

  • 2:00 pm GMT: U.S. FHFA HPI (0.5% expected, 0.4% previous)
  • 2:30 pm GMT: BOE MPC Member Kristin Forbes will deliver a speech
  • 2:45 pm GMT: Markit’s U.S. flash manufacturing PMI (51.9 expected, 51.3 previous)
  • 3:00 pm GMT: Richmond manufacturing index (-1 expected, -4 previous)
  • 9:00 pm GMT: Canada’s annual budget will be released

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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