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Trading conditions were a bit choppy during today’s morning London session, with many pairs practically trading sideways for the duration of the session.

The session wasn’t a complete snooze fest, though, since the Aussie was broadly higher while the yen was mostly weaker. And oddly enough, the Kiwi was also weaker and even almost lost out to the yen in the end, even though risk-taking got revived in Europe.

  • Euro Zone private sector loans y/y: 2.8% vs. 2.9% expected, 2.8% previous
  • U.K. preliminary Q4 GDP q/q: 0.5% vs. 0.4% expected and previous
  • U.K. preliminary Q4 GDP y/y: 1.5% vs. 1.4% expected, 1.7% previous

Major Events/Reports

U.K. Q4 GDP beats expectations, but…

The preliminary estimates for the U.K.’s Q4 GDP growth were released earlier today.

And as it turns out, the U.K.’s economy grew by 0.5% quarter-on-quarter, which is expected that the market consensus that GDP only expanded by 0.4%.

More importantly, quarterly GDP growth beat the BOE’s +0.4% forecast, as laid out in the BOE’s November inflation report.

Year-on-year, GDP grew by 1.5%, which is a tick faster than the expected +1.4%.

But on a more downbeat note, the U.K.’s annual growth of 1.5% in Q4 is the weakest since Q1 2013. Moreover, it marks the third consecutive month of ever weaker annual growth, thanks largely to weaker construction output (0.6% vs. 4.8% previous).

Oh, do note that this is the preliminary reading, so only the output approach is used to estimate GDP.

Having said that, the details of the GDP report showed the construction industry wasn’t the only drag to the U.K.’s annual GDP growth since 6 of the remaining 9 major industry groups printed weaker output or even negative output.

Some risk-taking to end the week

The major European equity indices got crushed in the wake of yesterday’s ECB statement.

However, they staged a broad-based recovery during today’s morning London session, which likely means that appetite for risk has returned in Europe.

And according to market analysts, the risk-on vibes was due to positive earnings and sales reports for some European companies. Although some market analysts also pointed to the fact that the euro is lower for the day after rising in the wake of the yesterday’s ECB presser.

  • The pan-European FTSEurofirst 300 was up by 0.51% to 1,573.31
  • Germany’s DAX was up by 0.17% to 13,321.50
  • The blue-chip Euro Stoxx 50 was up by 0.55% to 3,646.50

U.S. equity futures were in the green as well, which is evidence that risk-taking was the name of the game in Europe.

  • S&P 500 futures were up by 0.35% to 2,851.25
  • Nasdaq futures were up by 0.51% to 6,967.00

Global bond yields rise

Another sign that risk-taking was the prevailing sentiment in Europe was the rise in global bond yields.

  • German 10-year bond yield up by 2.95% to 0.628%
  • French 10-year bond yield up by 1.87% to 0.908%
  • U.K. 10-year bond yield up by 0.21% to 1.417%
  • U.S. 10-year bond yield up by 0.85% to 2.643%
  • Canadian 10-year bond yield up by 0.10% to 2.265%

Major Market Mover(s):


The Aussie ended the morning London session on a high note. Gold was down while iron ore was roughly flat and there weren’t really any positive catalysts for the Aussie.

Risk-taking was the name of the game in Europe, though, and that may have spurred demand for the higher-yielding Aussie.

AUD/USD was up by 12 pips (+0.14%) to 0.8087, AUD/CAD was up by 16 pips (+0.16%) to 0.9964, AUD/NZD was up by 43 pips (+0.39%) to 1.1017


Risk-on vibes and higher bond yields were a toxic combination for the safe-haven yen, so much so that the yen ended up as the worst-performing currency of the morning London session.

USD/JPY was up by 24 pips (+0.22%) to 109.27, CAD/JPY was up by 18 pips (+0.20%) to 88.68, AUD/JPY was up by 30 pips (+0.35%) to 88.36


The Kiwi was the second weakest currency of the morning London session. Heck, the Kiwi even almost lost out to the yen, which is rather wonky since there weren’t any apparent catalysts and risk-taking was the dominant sentiment to boot.

NZD/USD was down by 19 pips (-0.25%) to 0.7339, NZD/CHF was down by 20 pips (-0.30%) to 0.6863, NZD/CAD was down by 21 pips (-0.24%) to 0.9044

Watch Out For:

  • 1:30 pm GMT: Canada’s CPI report (-0.3% expected, +0.3% previous); read Forex Gump’s Event Preview
  • 1:30 pm GMT: U.S. advanced GDP report (3.0% expected, 3.2% previous)
  • 1:30 pm GMT: Headline (0.9% expected, 1.3% previous) and core (0.5% expected, -0.1% previous) readings for U.S. durable goods orders
  • 1:30 pm GMT: U.S. goods trade balance (-$68.6B expected, -$70.0B previous)
  • 1:30 pm GMT: Preliminary U.S. wholesale inventories (0.4% expected, 0.8% previous)
  • 2:00 pm GMT: CB’s Chinese leading index (1.8% previous)
  • 2:00 pm GMT: BOE Guv’nah Mark Carney will speaks
  • 2:00 pm GMT: BOJ Shogun Kuroda is scheduled to speak