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The yen extended its gains and was the one currency to rule them all, thanks to the risk-off vibes during the session that sent bond yields plunging hard. In fact, the yen is now the best-performing currency of the day.

The pound and the euro, meanwhile, were the worst-performing currencies of the morning London session.

  • Euro Zone PMI: 52.0 vs. 52.7 previous
  • Sentix Euro zone investor confidence: 28.4 vs. 27.6 expected, 27.4 previous
  • Euro Zone retail sales m/m: 0.1% vs. 0.2% expected, 0.2% previous
  • Euro Zone retail sales y/y: 2.5% vs. 2.1% expected, 2.3% previous

Major Events/Reports

Conservative Party may lose majority

According to YouGov, voting intentions for Theresa May’s Conservative Party will likely translate to 304 seats, as can be seen below.

To put the projection in its proper context, just remember that the Conservatives had 330 seats when Theresa May called for early elections back in April. Moreover, the Conservative Party needs to capture at least 326 out of 650 seats in order to have a working majority. As such, YouGov’s projection is doubly disappointing because it not only forecasts that the Conservatives will likely win fewer seats, but that they will probably lose majority control as well.

Risk aversion prevails in Europe

Risk aversion domination was still the name of the game in Europe, as the major European equity indices extended their losses for another day.

  • The pan-European FTSEurofirst 300 was down by 0.58% to 1,531.06
  • The U.K.’s FTSE 100 was down by 0.22% to 7,509.25
  • Germany’s DAX was down by 0.95% to 12,700.75
  • The blue-chip Euro Stoxx 50 was down by 1.04% to 3,550.50

U.S. equity futures also got weighed down by the gloomy mood in Europe.

  • S&P 500 futures were down by 0.32% to 2,426.75
  • Nasdaq futures were down by 0.26% to 5,865.50

Market analysts say that the general risk aversion was due to heightened geopolitical risks, with the spat between Qatar and its neighbors, the upcoming U.K. elections, and Ex-FBI Director Comey’s testimony all in focus.

Global bond yields plunge hard

Another clear sign of risk aversion was the demand for global bonds that caused bond yields to plunge hard across the board.

  • French 10-year bond yield down by 7.40% to 0.670%
  • German 10-year bond yield down by 11.60% to 0.259%
  • U.K. 10-year bond yield down by 4.80% to 0.992%
  • Canadian 10-year bond yield down by 2.55% to 1.377%
  • U.S. 10-year bond yield down by 2.00% to 2.136%

Aside from the prevalence of risk aversion, some market analysts also pointed to alleged plans by the Chinese government to increase its holdings of U.S. government bonds, as first noted in a Bloomberg Report (that cited unnamed sources).

Major Market Mover(s):


The yen extended its gains from the earlier Asian session and is now poised to end up as the best-performing currency of the day, very likely because of the risk-off vibes and plunging bond yields during the session.

USD/JPY was down by 22 pips (-0.19%) to 109.44, CAD/JPY was down by 23 pips (-0.29%) to 81.25, CHF/JPY was down by 38 pips (-0.34%) to 113.44


The pound was the worst-performing currency of the session, very likely because of election jitters, especially since YouGov released a report showing that the Conservative Party may lose enough seats to deny it majority control.

GBP/USD was down by 25 pips (-0.20%) to 1.2903, GBP/JPY was down by 55 pips (-0.39%) to 141.22, GBP/NZD was down by 57 pips (-0.32%) to 1.7984


The euro was the second worst-performing currency of the session, even though there were no direct catalysts, since the retail sales report for the Euro Zone was actually mixed, given that the monthly reading missed expectations while the annual reading accelerated at a faster-than-expected pace. It’s possible, however, that worries over the U.K. elections may be spreading to the euro. After all, a non-majority government in the U.K. would probably mean a tougher time negotiating Brexit.

EUR/USD was down by 25 pips (-0.22%) to 1.1248, EUR/JPY was down by 52 pips (-0.43%) to 123.09, EUR/NZD was down by 56 pips (-0.36%) to 1.5677

Watch Out For:

  • 2:00 pm GMT: Canada’s Ivey PMI (62.0 expected, 62.4 previous)
  • 2:00 pm GMT: U.S. JOLTS job openings (5.65M expected, 5.74M previous)
  • Dairy auction currently underway (+3.2% previous); auction usually ends at around 2:00 pm GMT