Article Highlights

  • German WPI m/m: (0.4% vs. 0.3% expected, -0.7% previous)
  • French final HICP m/m: (unchanged at -0.2% as expected)
  • French final HICP y/y: (unchanged at 0.5% as expected)
  • Euro Zone industrial production m/m: (1.6% vs. 1.5% expected, -0.7% previous)
  • Euro Zone industrial production y/y: (1.8% vs. 1.5% expected, -0.5% previous)
  • Credit Suisse ZEW survey (5.2 vs. 2.7 previous)
  • FOMC meeting minutes will be released later
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Price action was pretty choppy during today’s morning London session, with many currency pairs trading sideways. The only clear exception was the sinking euro, although the Greenback also showed some signs of demand.

Major Events/Reports:

SNB Zurbrugg speaks – SNB Vice Chairman Fritz Zurbrugg had the mic earlier, and he used that opportunity to try and talk down the Swissy franc. To be more specific, Zurbrugg said that “you still have a significant overvaluation of the franc.” Aside from that, he also defended the SNB’s dual tools, namely negative rates and currency manipulation, er, I meant to say currency intervention.

BOE Cunliffe speaks – BOE Deputy Governor Jon Cunliffe testified before the Financial Affairs Sub-Committee earlier. And he said that the BOE still thinks that the U.K.’s economy will deteriorate further as an Brexit becomes closer to reality, and even though recent data have been better-than-expected (so far). Cunliffe also commented on the pound’s flash crash, saying that “It recovered quickly, although the underlying trend for sterling, as we know, is down.” Interestingly enough, the pound barely budged and was trading mostly sideways during the session.

Signs of risk aversion – European equity indices were mostly leaking red, so risk aversion was probably the more dominant sentiment.

  • The pan-European FTSEurofirst 300 was up by 0.04% to 1,342.73
  • The blue-chip Euro Stoxx 50 was down by 0.02% to 3,018.00
  • Germany’s DAX was down by 0.18% to 10,558.25
  • The U.K.’s FTSE 100 was down 0.10% to 7,063.90

U.S. equity futures were slightly but clearly in the red.

  • S&P 500 futures were down by 0.14% to 2,131.50
  • Nasdaq futures were down by 0.18% to 4,818.38

Market analysts blamed the not so risk-friendly mood to the overall weakness in technology shares, thanks to Telecoms equipment maker Ericsson warned that its Q3 profits would be “significantly lower.” Aside from that, it’s possible that market players are just a bit skittish ahead of the release of the September FOMC minutes.

Crude oil recovers – Commodities were mostly in the red during the morning London session. Oil, however, was swimming against the tide, given that oil benchmarks were comfortably in positive territory.

  • U.S. crude oil was up by 0.49% to $51.04 per barrel
  • Brent blend crude oil was up by 0.59% to $52.72 per barrel

Market analysts attributed the recovery in oil prices to reports that India’s oil imports jumped 4.4% in September to a record high of 4.47 million barrels per day. Unfortunately, the rise in oil prices didn’t pump up demand for the Loonie.

Major Market Movers:

USD – There were signs of Greenback strength during the session, probably because of safe-haven demand or preemptive positioning ahead of the FOMC meeting minutes.

USD/JPY was up by 17 pips (+0.17%) to 103.74, USD/CAD was up by 28 pips (+0.21%) to 1.3244, USD/CHF was up by 7 pips (+0.07%) to 0.9891

EUR – The euro showed some weakness across the board during the morning London session, even though there were signs of risk aversion in the European equities market.

EUR/USD was down by 24 pips (-0.22%) to 1.1024, EUR/CHF was down by 16 pips (-0.15%) to 1.0903, EUR/GBP was down by 16 pips (-0.19%) to 0.8996

NZD – The prevalence of risk aversion during the session was probably weighing down on the higher-yielding Kiwi, since it ended up as the second-weakest currency after the euro.

NZD/USD was down by 17 pips (-0.24%) to 0.7061, NZD/JPY was down by 7 pips (-0.10%) to 73.24, NZD/CHF was down by 12 pips (-0.18%) to 0.6983

Watch Out For:

  • 1:40 pm GMT: Kansas City Fed President Esther L. George has a speech
  • 2:00 pm GMT: U.S. JOLTS job openings (5.79M expected, 5.87M previous)
  • 6:00 pm GMT: September FOMC meeting minutes will be released
  • 9:30 pm GMT: Business New Zealand’s manufacturing index (55.1 previous)
  • 9:45 pm GMT: New Zealand’s food price index (1.3% previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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