Article Highlights

  • Swiss USB Consumption Indicator Index: 1.59 vs. 1.53 previous
  • European M3 Money Supply (SA) y/y: 5.0% vs. 5.1% forecast/previous
  • U.K. Preliminary GDP q/q: 0.5% vs. 0.3% forecast, 0.7% previous
  • U.K. Preliminary GDP y/y: 2.3% vs. 1.9% forecast, 2.1% previous
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Wonky price action the FX markets as the U.K. GDP data surprise sparked volatility in Sterling, and the Aussie continued to flounder in the morning London session.

Major Events/Reports:

U.K. GDP beats forecast – It looks like there was no immediate recession in the U.K. after Brexit as the economy posted a rise of 2.3% y/y, better than the 2.1% annualized rate last quarter. This greatly reduces the odds of the Bank of England taking easing actions on monetary policy, so it’s no surprise Sterling saw a boost after the data release. Keep in mind that this was the first look at third quarter GDP, meaning volatility and momentum may be short lived for Sterling.

Aussie continues weakness – The Australian dollar continued to trade lower in the morning London session, a move that was possibly sparked by a reversal of sentiment on yesterday’s positive CPI reports. According to economist Emily Dabbs from Moody’s Analytics, the data was not as strong as it appears without the rise in fruit and vegetable prices. Whatever the direct cause may be, the Aussie is seeing red across the board with strong momentum.

Low volatility but risk sentiment rising – A lack of major events makes for a boring trading session, but European equity markets are rallying up from session lows:

  • The pan-European FTSEurofirst 300 was down by 0.07% to 1,348.87
  • The blue-chip Euro Stoxx 50 was down by 0.14% to 3,076.62
  • The U.K.’s FTSE 100 was down 0.03% to 6,955.95
  • The DAX was down by 0.06% to 10,703.43

And the U.S. markets are set to open higher according to futures trading:

  • S&P 500 futures was up by 0.27% to 2,139.75
  • Nasdaq futures was up by 0.28% to 4,867.25

Oil ticks higher – Oil is having a better day once again as inventory dropped and focus continues on OPEC’s commitment to cut production:

  • U.S. WTI crude oil was up by 0.49% to $49.42 per barrel.
  • Brent blend crude oil was up by 0.84% to $50.40 per barrel.

Major Market Movers:

GBP – broadly higher on earlier on the session but now mixed as Sterling is starting to give back its GDP inspired gains:

GBP/USD was down 13 pips (-0.12%) to 1.2235, EUR/GBP was up 22 pips (+0.24%) to .8926, GBP/JPY was up 19 pips (+0.16%) to 128.13

AUD – broadly lower as Australia positive CPI sentiment fades:

AUD/USD was down 32 pips (-0.42%) to .7617, AUD/JPY was down 17 pips (-0.21%) to 79.75, AUD/NZD was down 18 pips (-0.17%) to 1.0667

JPY – Japanese yen was broadly lower on the session as well, possibly on the small rally in broad financial market risk sentiment:

USD/JPY was up 23 pips (+0.23%) to 104.71, EUR/JPY was up 43 pips (+0.37%) to 114.39, CHF/JPY was up 35 pips (+0.34%) to 105.50

Watch Out For:

  • 12:30 pm GMT: U.S. Durable Goods Orders m/m (0.0% forecast, 0.1% previous)
  • 12:30 pm GMT: U.S. Durable Goods ex transport m/m (0.2% forecast, -0.2% previous)
  • 12:30 pm GMT: U.S. Weekly Initial Claims: (255K forecast, 260K previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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