Article Highlights

  • Euro Zone trade balance: €22.7B vs. €20.8B expected, €19.9B previous
  • BOE Guv’nah Mark Carney will be speaking later
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The pound was in recovery mode during today’s morning London session. The euro, meanwhile, spent the session by continuing to edge lower.

Major Events/Reports:

U.K. PM May’s spokesman – Theresa May’s spokesman, um, spoke to the press earlier today. And the spokesman said that Theresa May shares the same beliefs as Chancellor of the Exchequer Philip Hammond. To be more specific, the spokesman reiterated Hammond’s own Sunday statement.

“[I]f we are forced to do something different because we can’t get the right deal, then we stand ready to do so.”

Basically, the U.K. is also ready to play hard ball. Other than that, the spokesman refrained from talking about the pound’s slump in the wake of speculation ahead of the PM’s speech. However, the spokesman did dismiss talks about a “hard” Brexit as mere speculation.

Xi Jinping speaks – Chinese President Xi Jinping spoke in Switzerland earlier, and he said that he’s “confident” that China will continue to grow steadily. He also gave a heads up on GDP growth saying that:

“In 2016, last year, GDP is expected to grow by 6.7 percent on a year-on-year basis, and that means we missed our set target, but that expectation according to some international institutions will be among the highest among major economies.”

Rumors about Chinese GDP – According to four unnamed sources being cited by Reuters, China is a targeting a GDP growth rate of 6.5% in 2017. This is lower than last year’s target range of 6.5% to 7.0%, and “indicates that slightly slower growth is acceptable.”

Gloomy start in Europe – Europe is starting the trading week on a downbeat note, with practically all European equity indices printing losses.

  • The pan-European FTSEurofirst 300 was down by 0.75% to 1,436.33
  • The blue-chup Euro Stoxx 50 was down by 0.59% to 3,301.50
  • Germany’s DAX was down by 0.65% to 11,554.15

The risk-off vibes also weighed down on U.S. equity futures.

  • S&P 500 futures were down by 0.24% to 2,267.00
  • Nasdaq futures were down by 0.16% to 5,053.12

One very noticeable exception to the sea of red was the U.K.’s FTSE 100, as British exporters got a boost from the pound’s earlier slump.

  • The U.K.’s FTSE 100 was up by 0.10% to 7,345.05

Quite naturally, market analysts blamed the gloomy mood on Brexit jitters ahead of Theresa May’s speech. Although Trump-related uncertainty was also cited as a reason for the lack of risk-taking.

Major Market Movers:

GBP – The pound is still the worst-performing currency of the day. However, it ended up as the best-performing currency of the morning London session, as pound pairs slowly clawed their way higher. Aside from profit-taking ahead of Theresa May’s Tuesday speech, there was no clear reason for the recovery.

GBP/USD was up by 21 pips (+0.18%) to 1.2062, GBP/CHF was up by 40 pips (+0.34%) to 1.2202, GBP/JPY was up by 32 pips (+0.24%) to 137.68

EUR – The pound was in recovery mode during today’s morning London session. The same can’t be said for the euro, though, since the euro ended up extending its losses. It’s unclear why the euro continued to slide, given the risk-off vibes during the session.

It’s possible that forex traders were disappointed that the Euro Zone’s trade surplus was a miss and that the U.K. is still importing more from the E.U. than it is exporting to the E.U. However, that’s unlikely, given that the trade report is considered only a low-tier item and because the bulk of the euro’s losses were incurred an hour before the trade report was released. Although it’s also possible that market players got worried that Theresa May is apparently ready to play hard ball with the E.U., as revealed by the British PM’s spokesman.

EUR/USD was down by 22 pips (-0.21%) to 1.0590, EUR/AUD was down by 34 pips (-0.25%) to 1.4167, EUR/NZD was down by 47 pips (-0.32%) to 1.4913

Watch Out For:

  • 6:30 pm GMT: BOE Guv’nah Mark Carney has a speech
  • 9:00 pm GMT: NZIER business confidence index (26 previous)
  • Martin Luther King Jr. Day federal holiday in the U.S.A. today

See also:

Asian Session Recap 
Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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