There wasn’t much in terms of market-moving news or economic report during today’s morning London session.
Even so, there was action aplenty since the Swissy caught a bid, apparently because of the risk-off vibes in Europe. The pound, meanwhile, got swamped by sellers, supposedly because of renewed Brexit-related jitters.
- German import prices m/m: 0.3% vs. 0.2% expected, 0.8% previous
- German import prices y/y: 1.1% vs. 1.0% expected, 2.7% previous
Lords’ Constitution Committee Report
The E.U. Withdrawal Bill passed through the House of Commons and is slated for debate in the House of Lords this Tuesday and Wednesday.
Before the debates started, however, the House of Lords Select Committee on the Constitution released a report on the E.U. Withdrawal Bill earlier today.
And according to the Peers who conducted this report:
“We conclude that the bill risks fundamentally undermining legal certainty in a number of ways.”
“We acknowledge the scale, challenge and unprecedented nature of the task of converting existing EU law into UK law, but as it stands this bill is constitutionally unacceptable.”
Risk-off start in Europe
The major European equity indices opened slightly higher but quickly turned tail and ran into bearish territory, hinting that risk aversion was the dominant sentiment in Europe.
And market analysts say that the earlier risk-on vibes were due to the euro’s slide since last Friday, as well as deal-making activity among pharmaceutical companies and strong earnings reports for some companies.
As for the later signs of risk aversion, market analysts say that was due to worries in the tech sector after rumors surfaced that sales of Apple’s iPhone X were weak.
- The pan-European FTSEurofirst 300 was down by 0.20% to 1,571.05
- Germany’s DAX was down by 0.17% to 13,318.00
- The blue-chip Euro Stoxx 50 was down by 0.12% to 3,642.50
Another sign that risk aversion was the dominant sentiment was the fact that U.S. equity futures were also in the red.
- S&P 500 futures were down by 0.31% to 2,865.50
- Nasdaq futures were down by 0.36% to 7,004.75
Major Market Mover(s):
The pound had a rough time during the morning London session, so much so that the pound is now the worst-performing currency of the day (so far).
There weren’t any direct catalysts for the pound’s slide and the Lords’ report on the E.U. Withdrawal Bill was released a few hours before the pound started to slump.
However, market analysts blamed that report and infighting within Theresa May’s Conservative Party over the weekend, as well as rumors that Theresa May’s authority will be challenged yet again, as reasons for the pound’s slide since those supposedly ignited political uncertainty and renewed Brexit-related fears.
GBP/USD was down by 54 pips (-0.38%) to 1.4071, GBP/JPY was down by 72 pips (-0.47%) to 153.17, GBP/CHF was down by 83 pips (-0.63%) to 1.3164
The prevalence of risk aversion during the session meant safe-haven demand for the Swissy and the yen.
The Swissy was able to outpace the yen to come out on top, however, likely because rising bond yields were a drag on the yen.
USD/CHF was down by 22 pips (-0.24%) to 0.9355, CAD/CHF was down by 18 pips (-0.24%) to 0.7578, EUR/CHF was down by 44 pips (-0.38%) to 1.1586
Watch Out For:
- 1:30 pm GMT: U.S. personal income (0.3% expected, same as previous) and personal spending (0.5% expected, 0.6% previous)
- 1:30 pm GMT: U.S. core PCE price index (0.2% expected, 0.1% previous)
- 9:45 pm GMT: New Zealand’s trade balance (-$125M expected, -$1,193M previous)