Article Highlights

  • German industrial production m/m: 2.8% vs. 2.6% expected, -3.0% previous
  • French trade balance: -€7.84B vs. -€3.80B expected, -€3.6B previous
  • Swiss CPI m/m: 0.5% vs. 0.2% expected, 0.0% previous
  • Swiss CPI y/y: 0.6% vs. 0.4% expected, 0.3% previous
  • U.K. budget statement ongoing
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Today was another choppy and relatively subdued morning London session. There was some action, though, since the Swissy and the Greenback were in demand. The pound, meanwhile, was broadly weaker before getting a bullish infusion when the session was about to end.

Major Events/Reports:

U.K. budget statementAccording to Chancellor of the Exchequer Philip Hammond, the Office of Budget Responsibility (OBR) has upgraded its GDP forecast for this year from 1.6% to 2.0%. The upgrade supposedly reflects the recent strength in the British economy. The economy is then expected to decelerate to 1.6% in 2018, picking up to 1.7% in 2019, accelerating to 1.9% in 2020 and then back at 2.0% by 2021.

Hammond also said that headline inflation is expected to come in at 2.4% for this year, 2.0% for 2018, and also 2.0% for 2019. Furthermore, “Public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year.”

Pretty upbeat so far, yeah? Well, Hammond also said that “From April this year, it [Corporation Tax] will fall to 19%, the lowest rate in the G20. In 2020 it will fall again to 17%.” Regarding the labor market, Hammond forecasted that “a further 2/3rds of a million people” are expected to be in work by 2021.

Le Pen loses ground – According to opinionway’s daily poll, Macron’s lead against the anti-EU Marine Le Pen widened today. Specifically, poll results show 62-38 in favor of Macron for the second round of the French presidential elections. Poll results held steady at 60-40 in favor of Macron during the last two days.

Oil plunges – Commodities were mixed for the session, but oil benchmarks were clearly plunging hard.

  • U.S. crude oil was down by 1.05% to $52.58 per barrel
  • Brent crude oil was down by 1.02%% to $55.35 per barrel

Market analysts blamed the hard drop in oil prices on speculation that the U.S. Energy Information Administration will report a build-up in oil inventories later.

Another downbeat day in Europe – European equity indices had a steady start, but later got hit by another wave of risk aversion during today’s morning London session.

  • The pan-European FTSEurofirst 300 was down by 0.23% to 1,465.43
  • Germany’s DAX was down by 0.20% to 11,942.50
  • The blue-chip Euro Stoxx 50 was down by 0.04% to 3,379.50

Even U.S. equity futures felt the risk-off vibes.

  • S&P 500 futures were down by 0.07% to 2,364.75
  • Nasdaq futures were down by 0.04% to 5,347.62

Pharmaceuticals and oil companies were the main losers, so the risk-off mood was apparently due to Trump’s tweet about pharmaceuticals and the plunge in oil prices respectively.

Major Market Movers:

CHF – Safe-haven flows probably allowed the Swissy to end up as the best-performing currency of the session. Although the Swissy did have a hard time against the Greenback.

CAD/CHF was down by 12 pips (-0.16%) to 0.7538, NZD/CHF was down by 15 pips (-0.21%) to 0.7030, AUD/CHF was down by 10 pips (-0.13%) to 0.7657

USD – After suffering during the earlier session, the Greenback staged a broad-based recovery during the morning London session. There were no apparent catalysts but preemptive positioning ahead of the ADP report is a possibility.

EUR/USD was down by 4 pips (-0.04%) to 1.0555, AUD/USD was down by 9 pips (-0.12%) to 0.7557, NZD/USD was down by 14 pips (-0.20%) to 0.6939

GBP – The pound was the weakest currency for most of the session. And market analysts blamed that on Brexit-related jitters after the Lords introduced more amendments to the Brexit Bill yesterday. However, the pound made a comeback shortly after Hammond began talking about U.K.’s annual budget and the OBR’s rather optimistic forecasts.

GBP/USD was down by 5 pips (-0.04%) to 1.2176 after being down by 43 pips (-0.35%) to 1.2138 earlier, GBP/JPY 37 was up by pips (+0.27%) to 139.10 after being down by 30 pips (-0.22%) to 138.42 earlier, GBP/CHF was down by 8 pips (-0.07%) to 1.2337 after being down by 47 pips (-0.38%) to 1.2298 earlier

Watch Out For:

  • 1:15 pm GMT: U.S. ADP report (184K expected, 246K previous)
  • 1:15 pm GMT: Canadian housing starts (205K expected, 207K previous)
  • 1:30 pm GMT: Canadian building permits (3.1% expected, -6.6% previous) and quarterly labor productivity (0.4% expected, 1.2% previous)
  • 1:30 pm GMT: U.S. revised non-farm productivity (1.5% expected, 1.3% previous) and revised unit labor costs (1.6% expected, 1.7% previous)
  • 3:00 pm GMT: U.S. final wholesale inventories (unchanged at -0.1% expected)
  • 3:30 pm GMT: U.S. crude oil inventories (1.1M expected, 1.5M previous)

See also:

Asian Session Recap 
U.S. Session Recap

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