Article Highlights

  • Euro Zone current account: €36.2 vs. €24.7 expected €26.3 previous
  • Euro Zone labor cost index y/y: 1.7% vs. 1.3% previous
  • Italian trade balance: €4.52B vs. €5.95B expected, €5.23B previous
  • Canada’s CPI readings for later
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No top-tier items on the docket for today’s morning London session, so trading conditions were rather tight, with most currency pairs trading sideways and ending the session flat. There was some noticeable and uniform movement from pound and euro pairs, however, likely because of easing Brexit concerns (or end-of-week profit-taking).

Major Events/Reports:

Oil rallies hard – Oil benchmarks were in full rally mode during the morning London session, with U.S. crude oil up by 2.06% to $47.16 per barrel and Brent blend crude oil up by 2.61% to $48.42 per barrel.

Some market analysts attributed the oil rally to oil shorts taking profits off the table while other analysts are pointing to the weaker U.S. dollar, which makes commodities such as oil relatively cheaper and more attractive.

Sentiment flips back to risk-on – There was risk-taking aplenty in the European markets, with the pan-European FTSEurofirst 300 up by 0.93% to 1,277.03, the blue-chip Euro Stoxx 50 up by 0.44% to 2,837.00, the U.K. FTSE100 up by 0.80% to 5,998.00, and the DAX up by 0.35% to 9,584.00.

Meanwhile, the safe-haven gold was down by 0.53% to $1,291.55 per troy ounce. As for U.S. equity futures, they didn’t share the optimism since they were off their lows but still in the red, with the S&P 500 futures index down by 0.14% to 2,067.50 and the Nasdaq futures index slightly down by 0.08% to 4,413.38.

Market analysts attributed the prevalence of risk appetite in the European markets to easing Bexit concerns after both the “leave” and “remain” camps agreed to halt campaigning after a British MP was killed. It’s also possible, however, that we’re seeing some profit-taking after a mostly risk-off week and in order to avoid weekend risk.

Major Currency Movers:

GBP & EUR – Pound and euro pairs were still range-bound, if you consider price action from the earlier Asian session, but pound pairs and, to a much lesser extent, euro pairs were both getting some buyers that sent most of them uniformly higher.

Market analysts attributed this to easing Brexit jitters. Although I think profit-taking was likely a reason as well.

GBP/USD was up by 60 pips (+0.42%) to 1.4298, GBP/JPY was up by 55 pips (+0.37%) to 149.08, GBP/AUD was up by 66 pips (+0.35%) to 1.9360

EUR/USD was up by 16 pips (+0.15%) to 1.1252, EUR/AUD was up by 13 pips (+0.10%) to 1.5238, EUR/NZD was up by 29 pips (+0.18%) to 1.5976

Watch Out For:

  • 12:30 pm GMT: U.S. housing starts (1.15m expected, 1.17M previous)
  • 12:30 pm GMT: U.S. building permits (1.15M expected, 1.12M previous)
  • 12:30 pm GMT: Headline (0.5% expected, 0.3% previous) and core (0.3% expected, 0.2% previous) readings for Canada’s CPI
  • 3:00 pm GMT: ECB President Draghi is scheduled to speak
  • 5:05 pm GMT: BOC Senior Deputy Governor Carolyn Wilkins will speak

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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