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Today’s morning London session was steady for the most part, but that doesn’t mean that the session was a complete snooze fest since both the Aussie and the Kiwi were grinding higher against their peers, likely because of the risk-on vibes.

The Loonie also did well and was the third best-performing currency, even though oil was down for the session. There were no apparent catalysts, but preemptive positioning ahead of Canada’s retail sales report is a possibility.

As for the other currencies, the euro was mixed  while the Swissy was a net winners. The euro actually jumped higher at the start of the session when the latest batch of Euro Zone PMI reports were released. However, euro lost ground to comdolls and the Swissy later, thereby ending the session mixed.

The Swissy meanwhile, took directional cues from the euro and also got an early boost when risk aversion prevailed, but also lost ground to the comdolls.

The yen, meanwhile, lost out too its forex peers, likely because of the risk-on vibes. As for the pound and the Greenback, they were flat against each other and were net losers.

  • German final Q3 GDP q/q: unchanged at 0.8% as expected
  • German final Q3 GDP y/y: unchanged at 2.8% as expected
  • French manufacturing PMI: 57.5 vs. 55.9 expected, 56.1 previous
  • French services PMI: 60.2 vs. 57.0 expected, 57.3 previous
  • German manufacturing PMI: 60.2 vs. 60.4 expected, 60.6 previous
  • German services PMI: 54.9 vs. 55.0 expected, 54.7 previous
  • Euro Zone manufacturing PMI: 60.0 vs. 58.2 expected, 58.5 previous
  • Euro Zone services PMI: 56.2 vs. 55.2 expected, 55.0 previous
  • U.K. 2nd est. Q3 GDP q/q: unchanged 0.4% as expected
  • U.K. 2nd est. Q3 GDP y/y: unchanged at 1.5% as expected

Major Events/Reports

ECB’s meeting minutes

The minutes of the ECB’s most recent huddle were released late into the session. And, well, a quick reading of the minutes don’t really tell us anything new.

The ECB, for example, remained upbeat on the growth prospects for the Euro Zone when it noted the following in the minutes:

“Incoming information pointed to continued solid economic expansion in the second half of 2017.”

In terms of risk, the ECB also noted that:

“Risks to the growth outlook remained broadly balanced, with some upside risk in the near term.”

And as usual, the ECB took a stab at the euro when it said that downside risks are “related mainly to global factors and developments in foreign exchange markets.”

Also as usual, the ECB sounded a bit more cautious with regard to inflation:

“However, inflation developments still remained subdued. Measures of underlying inflation had ticked up moderately since early 2017, but they had yet to show more convincing signs of a sustained upward trend. In addition, the convergence of inflation towards the Governing Council’s aim remained conditional on a substantial degree of monetary policy accommodation.”

The only interesting (but not really all that surprising) part was the ECB’s acknowlodgement that announcing an end date to its QE program may lead to tigher financial conditions.

To quote directly from the minutes (emphasis mine):

“Therefore, retaining the open-endedness of the APP underscored the Governing Council’s steadfast commitment to preserve the degree of accommodation needed for inflation to return towards levels that were below, but close to, 2%. It was cautioned that any doubt about the Governing Council’s price stability commitment could entrench inflation expectations at low levels. Together with a lower equilibrium real interest rate, this could hamper the Governing Council’s capacity to respond to future shocks. In addition, the announcement of an end date could induce market participants to frontload possible price adjustments, which might lead to an undue tightening in financial conditions.”

Net Positive Euro Zone PMI reports

Markit released the latest batch of PMI reports for Germany, France, and the Euro Zone earlier during the session.

And according to the latest PMI report for the Euro Zone as a whole, the Euro Zone’s flash manufacturing PMI jumped from 58.5 to 60.0 in November instead of easing to 58.2 as expected. Even better, November’s reading is a 211-month high, which is pretty amazing.

The Euro Zone’s flash services PMI, meanwhile, also jumped from 55.0 to a six-month high of 56.2, beating forecasts that it would only improve slightly to 55.2.

Commentary from Markit was also pretty upbeat since “multi-year highs [were] seen for all main indicators of output, demand, employment and inflation in November.”

In fact, “Business activity and prices rose at the steepest rates for over six years,” according to Markit.

Signs of returning appetite for risk

The European equity indices had a soft start and proceeded to dip even lower.

However, signs of returning risk appetite soon began to show since the major European equity indices began clawing their way higher, with many already in positive territory by the time the morning London session came to an end.

And market analysts pretty much attributed the returning risk-on vibes to the net positive Euro Zone PMI reports that were released during the session.

  • The pan-European FTSEurofirst 300 was already up by 0.02% to 1,522.09
  • Germany’s DAX was still down by 0.09% to 13,003.50 but off session lows at 12,921.50
  • The blue-chip Euro Stoxx 50 already was up by 0.34% to 3,577.00

U.S. equity futures were also pushed higher into the green by the returning risk-on vibes.

  • S&P 500 futures were up by 0.10% to 2,597.00
  • Nasdaq futures were up by 0.07% to 6,394.26

Major Market Mover(s):

NZD & AUD

The Aussie and the Kiwi were able to edge out their peers during the morning London session. Commodities were actually down and there were no apparent catalysts, so the two higher-yielding currencies likely got a boost because of the returning risk-on vibes.

AUD/USD was up by 12 pips (+0.16%) to 0.7628, AUD/CAD was up by 15 pips (+0.16%) to 0.9674, AUD/JPY was up by 18 pips (+0.21%) to 84.85

NZD/USD was up by 10 pips (+0.14%) to 0.6889, NZD/JPY was up by 12 pips (+0.16%) to 76.62, NZD/CAD was up by 4 pips (+0.05%) to 0.8740

JPY

The yen barely lost out to the pound and the Greenback and ended up as the worst-performing currency of the morning London session, likely because of the returning risk-on vibes.

USD/JPY was up by 5 pips (+0.04%) to 111.23, EUR/JPY was up by 23 pips (+0.17%) to 131.73, CHF/JPY was up by 25 pips (+0.22%) to 113.41

Watch Out For:

  • 1:30 pm GMT: Headline (+0.9% expected, -0.3% previous) and core (+1.0% expected, -0.7% previous) readings for Canadian retail sales; read Forex Gump’s preview
  • 4:30 pm GMT: SNB Final Boss Thomas Jordan will be speaking
  • 9:45 pm GMT: New Zealand trade balance (-$2,705M expected, -$2,908M previous)
  • Thanksgiving Day holiday in the U.S.A. today