Article Highlights

  • German retail sales m/m: -0.9% vs. 0.6% expected, -1.7% previous
  • German retail sales y/y: -1.1% vs. 0.5% expected, 3.2% previous
  • French HICP m/m: -0.2% vs. -0.5% expected, 0.3% previous
  • French HICP y/y: 1.6% vs. 1.2% expected, 0.8% previous
  • U.K. net lending to individuals: £4.8B vs. £5.3B expected, £5.1B previous
  • U.K. mortgage approvals: 67.9K vs. 69.2K expected, 67.5K previous
  • Euro Zone flash HICP y/y: 1.8% vs. 1.5% expected, 1.1% previous
  • Euro Zone flash core HICP y/y: 0.9% as expected, same as previous
  • Euro Zone preliminary GDP q/q: 0.5% as expected, 0.3% previous
  • Euro Zone preliminary GDP y/y: 1.8% vs. 1.7% expected, 1.7% previous
  • Euro Zone jobless rate: 9.6% vs. 9.8% expected, 9.7% previous
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The euro was the king of pips (or queen if you like) during today’s morning London session. Meanwhile, the pound and the Greenback were both under bearish pressure.

Major Events/Reports:

The BOE’s Money and Credit report – The BOE released its Money and Credit report for the December period today. And according to the report, the number of mortgage approvals came in at 67.9K, fewer than the expected 69.2K, but slightly more than the previous month’s 67.5K figure. Despite being a miss, the current reading keeps the uptrend steady, and implies that the U.K. housing market is still relatively stable.

Aside from that, net lending to individuals increased by £4.8 billion in December, much less than the expected £5.3 billion, as well as the £5.1 was printed during the previous month. Moreover, this is the smallest increase since May 2015 and puts an end to five months of improving readings. And this means that consumer credit weakened in December. It remains to be seen if this will translate to weaker consumer spending, however.

BOJ’s JGB purchases – Earlier, the BOJ released it outline for JGB purchases for February. And it was unchanged from its December purchases.

??Buying size for 5-10 year JGBs, in particular, was maintained at ¥410 billion. This thereby puts an end to speculation that the BOJ is planning to accelerate its asset purchases after Reuters reported last week that the BOJ increased its purchases of 5-10 year bonds to ¥450 billion.

Mood swings in Europe – European equity indices broadly opened lower then rapidly climbed higher after the session opened. After that, European equity indices spent the rest of the session by sliding back down.

  • The pan-European FTSEurofirst 300 was down by 0.02% to 1,431.21
  • The blue-chup Euro Stoxx 50 was still up by 0.19% to 3,265.50 but off its session high at 3,284.00
  • Germany’s DAX was also already down by 0.02% to 11,684.50

U.S. equity futures were leaking read, hinting that risk aversion will likely spill over into the U.S. session.

  • S&P 500 futures were down by 0.21% to 2,271.25
  • Nasdaq futures were down by 0.20% to 5,114.13

Commodities were mixed, but precious metals were clearly in demand, which is also a sign of the risk-off vibes. After all, precious metals are considered as traditional safe-havens.

  • Gold was up by 1.00% to $1,207.95 per troy ounce
  • Silver was up by 1.49% to $17.407 per troy ounce

Market analysts attributed the early rally to positive earnings reports for some European companies. As for the later slide, some market analysts blamed that on Trump-related worries.

Trump trade adviser Navarro speaks – Earlier today, The Financial Times released an article about its interview with Peter Navarro, the top dog of Trump’s National Trade Council. And according to The Financial Times, Navarro attacked Germany, saying that:

“Germany is using a ‘grossly undervalued’ euro to ‘exploit’ the US and its EU partners.”

Navarro also said that Germany is a major obstacle when it comes to trade with the E.U., saying that:

“A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued.”

By the way, TTIP stands for the Transatlantic Trade and Investment Partnership, which is basically a trade deal between the U.S. and the E.U. Anyhow, Navarro also said that with regard to TTIP, “Brexit killed TTIP on both sides of the Atlantic even before the election of Donald Trump.”

Aside from Navarro’s criticisms of Germany, The Financial Times also notes that Navarro views “suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties.”

Major Market Movers:

EUR – The euro has a mixed start but started getting bid higher as risk aversion began to return in Europe. Some euro pairs then dipped when the Euro Zone printed better-than-expected readings for various economic reports. However, euro pairs all broadly jumped higher when The Financial Times released its article, as noticed by other market analysts.

EUR/USD was up by 48 pips (+0.45%) to 1.0748, EUR/JPY was up by 32 pips (+0.26%) to 121.82, EUR/CHF was up by 16 pips (+0.15%) to 1.0662

GBP – The pound actually had a promising start. However, pound pairs got kicked broadly lower when the BOE’s Money and Credit report was released, since it showed that consumer credit weakened. However, some market analysts also point to the Parliamentary debate on the Brexit Bill, so Brexit-related jitters were also possibly in play.

GBP/CHF was down by 36 pips (-0.29%) to 1.2386 with 1.2452 as session high, GBP/CAD was down by 35 pips (-0.22%) to 1.6312 with 1.6409 as session high, GBP/NZD was down by 41 pips (-0.25%) to 1.7076 with 1.7191 as session high

USD – Like the pound, the Greenback also had a promising start before depreciating across the board. There was no apparent catalyst for this weakness. However, market analysts were quick to blame the Greenback’s weakness on Trump-related worries.

USD/CHF was down by 39 pips (-0.39%) to 0.9920 with 0.9966 as session high, USD/JPY was down by 24 pips (-0.22%) to 113.29 with 113.96 as session high, USD/CAD was down by 31 pips (-0.24%) to 1.3063 with 1.3123 as session high

Watch Out For:

  • 1:30 pm GMT: Canadian monthly GDP (0.3% expected -0.3% previous)
  • 1:30 pm GMT: Canadian RMPI (2.9% expected, -2.0% previous) and IPPI (0.5% expected, 0.3% previous)
  • 2:00 pm GMT: U.S. S&P/Case-Shiller HPI (5.0% expected, 5.1% previous)
  • 2:45 pm GMT: U.S. Chicago PMI (55.0 expected, 53.9 previous)
  • 3:00 pm GMT: U.S. CB consumer confidence index (112.8 expected, 113.7 previous)
  • 9:45 pm GMT: New Zealand’s employment change (0.8% expected, 1.4% previous)
  • 9:45 pm GMT: New Zealand’s jobless rate (4.8% expected, 4.9% previous)
  • 10:30 pm GMT: AIG’s Australian manufacturing index
  • 10:35 pm GMT: BOC Governor Stephen Poloz speaks

See also:

Asian Session Recap 
U.S. Session Recap

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

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