Article Highlights

  • German industrial production m/m: 0.3% vs. 0.8% expected, -1.6% previous
  • German industrial production y/y: 1.2% vs. 1.6% expected, 1.3% previous
  • French trade balance: -€5.20B vs. -€4.35B expected, -€4.77B previous
  • Halifax U.K. HPI: 0.2% as expected, 1.5% previous
  • U.K. industrial production m/m: -1.3% vs. 0.2% expected, -0.4% previous
  • U.K. industrial production y/y: -1.1% vs. 0.5% expected, 0.4% previous
  • U.K. manufacturing production m/m: -0.9% vs. 0.2% expected, 0.6% previous
  • U.K. manufacturing production y/y: -0.4% vs. 0.7% expected, 0.1% previous
  • BOC monetary policy decision later
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Risk-taking was the name of the game, so both the higher-yielding Kiwi and Aussie got bought up. Meanwhile, the pound got kicked broadly lower, likely on poor data.

Major Events/Reports:

U.K. industrial output slumpsTotal industrial production in the U.K. dropped sharply in October. The 1.3% month-on-month drop was a severe disappointment because the reading was expected to print a 0.2% recovery after September’s 0.4% fall. Also, this is the third negative reading in a row, as well as the sharpest drop since September 2012.

The main drag came from 8.6% slump in mining and quarrying output, although the 0.9% slide (+0.6% previous) in manufacturing output also exerted downward pressure. In addition, weakness in the manufacturing sector was broad-based, with only 9 of the 13 sub-sectors reporting declines.

Year-on-year, industrial production fell by 1.1%, going in the opposite direction from the consensus that it would improve from 0.4% to 0.5%. Moreover, this is the first negative reading in 10 months. And looking at the details of the report, the mining and quarrying sector is still the main culprit, thanks to the the 8.7% drop, which subtracted 1.15% from total output. The 0.4% tumble in manufacturing output was also a drag, deducting 0.30% from total industrial growth.

Italian PM to retire on Friday? – According to a Reuters report that cited an unnamed “parliamentary source” (*cough* a rumor *cough*), Matteo Renzi, the despondent Italian Prime Minister, would be resigning this Friday. Renzi vowed to resign if the “No” camp won the Italian referendum, but was asked by President Mattarella to delay his resignation.

More risk-taking in Europe – Risk-taking is still the name of the game during today’s morning London session, since almost all of the major European equity indices were in the green.

  • The pan-European FTSEurofirst 300 was up by 0.72% to 1,370.53
  • The blue-chip Euro Stoxx 50 was up by 1.01% to 3,134.00
  • Germany’s DAX was up by 1.48% to 10,934.50

Market analysts noted that banking shares, especially Italian banks, were still leading the way. And the rally in banking shares was attributed to cost-cutting reports from Credit Suisse, as well as optimism that a potential banking crisis in Italy could be averted after a Reuters report emerged yesterday that Italy supposedly plans to take a €2 billion controlling stake in Monte Paschi, which fueled speculation of a bailout plan.

Major Market Movers:

GBP – The pound was already showing signs of weakness before the morning London session rolled around. However, the bears came out of the woods and mauled the pound when the U.K.’s readings for industrial production disappointed severely.

GBP/USD was down by 24 pips (-0.19%) to 1.2608, GBP/JPY was down by 60 pips (-0.42%) to 143.83, GBP/CHF was down by 28 pips (-0.22%) to 1.2732

AUD & NZD – Risk appetite prevailed for another day, so the higher-yielding Kiwi and Aussie both vied for supremacy during the session. The Aussie managed to win out against the Kiwi in the end, though, probably helped by short covering after the Aussie dropped in the wake of Australia’s disappointing Q3 GDP report. AUD/NZD was up by 7 pips (+0.07%) to 1.0430.

AUD/USD was up by 29 pips (+0.40%) to 0.7449, AUD/CHF was up by 28 pips (+0.38%) to 0.7522, AUD/CAD was up by 33 pips (+0.34%) to 0.9891

NZD/USD was up by 23 pips (+0.33%) to 0.7141, NZD/CAD was up by 26 pips (+0.28%) to 0.9482, NZD/CHF was up by 23 pips (+0.32%) to 0.7211

Watch Out For:

  • 3:00 pm GMT: BOC monetary policy decision (overnight rate steady at 0.50% expected)
  • 3:00 pm GMT: JOLTS U.S. job openings (5.53M expected, 5.49M previous)
  • 3:30 pm GMT: U.S. crude oil inventories (-1.4M expected, -0.9M previous)
  • 8:00 pm GMT: RBNZ Governor Graeme Wheeler has a speech
  • 8:00 pm GMT: U.S. consumer credit ($18.65B expected, $19.29B previous)

See also:

Asian Session Recap

U.S. Session Recap

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