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Price action was a bit wonky during today’s morning London session since the Greenback surrendered its earlier gains while the pound stage a broad-based recovery, even though there were no apparent catalysts for either currencies.

The yen takes the cake when it come to wonky price action, though, since the yen was the second worst-performing currency of the session, despite the risk-off vibes and falling bond yields.

  • Swiss trade balance: CHF 2.63B vs. CHF 2.54B expected, CHF 2.58B previous
  • French flash Q4 GDP q/q: 0.6% as expected, same as previous
  • French flash Q4 GDP y/y: 2.4% vs. 2.3% expected, same as previous
  • KOF Swiss economic barometer: 106.9 vs. 110.8 expected, 111.4 previous
  • Spanish Q4 GDP q/q: 0.7% as expected, 0.8% previous
  • Spanish Q4 GDP y/y: 3.1% vs. 3.2% expected, 3.1% previous
  • U.K. net lending to individuals m/m: £5.2B vs. £4.8B expected, £5.2B previous
  • U.K. mortgage approvals: 61K vs. 64K expected, 65K previous
  • Euro Zone flash Q4 GDP q/q: 0.6% as expected, 0.7% previous
  • Euro Zone flash Q4 GDP y/y: 2.7% as expected, 2.8% previous

Major Events/Reports

Month-end flows?

The month is about to end, so some month-end capital flows are to be expected as hedge funds, mutual funds, pension funds, and other large players rebalance their portfolios and/or prepare to make cash distributions.

These month-end flows usually result in some rather wonky price action. And it’s likely that these month-end flows are contributing to (or are the source of) the wonky price action during the session.

Euro Zone preliminary Q4 GDP report

The preliminary estimate for Q4 GDP growth in the Euro Zone as a whole was released earlier, and it revealed that the Euro Zone economy grew by 0.6% quarter-on-quarter.

This is a tick slower than Q3’s +0.7% quarterly rate of expansion but is with expectations.

Year-on-year, the Euro Zone’s GDP grew by 2.7%. Like the quarterly reading, this is slower compared to Q3’s +2.8% annual growth but is also within expectations.

On a more upbeat note, the Euro Zone economy grew by 2.5% for the whole of 2017, which is faster than the ECB’s forecast of +2.4%, as reported in the December 2017 Eurosystem staff macroeconomic projections.

Precious metals rise as other commodities fall

Most commodities were down in the dumps during today’s morning London session.

However, not all commodities were in the red since precious metals were well in the green, likely because of the risk-off vibes in Europe. Precious metals are considered traditional safe-havens after all.

As for the broad-based commodities slide, there’s no clear reason for that. And we can’t really point to Greenback strength since the Greenback retreated across the board and erased its earlier gains.

And for reference, the U.S. dollar index was down by 0.29% to 88.91 for the day when the session ended.

Some market analysts think that the slide in base metals was due to profit-taking, though.

Base metals were mostly bleeding out.

  • Copper was down by 0.09% to $3.191 per pound
  • Nickel was down by 1.28% to $13,665.00 per dry metric ton

Oil benchmarks also had a tough time.

  • U.S. WTI crude oil was down by 0.99% to $64.91 per barrel
  • Brent crude oil was down by 0.64% to $68.76 per barrel

Precious metals, meanwhile, were a clear exception since they were raking in gains during the session.

  • Gold was up by 0.19% to $1,342.90 per troy ounce
  • Silver was up by 0.54% to $17.220 per troy ounce

Risk aversion in Europe

Risk aversion was apparently the dominant sentiment in Europe because the major European equity indices opened lower and then proceeded to plumb new intraday lows during the duration of the session.

Market analysts mainly pointed to risk sentiment spillover from the earlier session as the reason for the risk-off vibes in Europe. Although these same market analysts also blamed the commodities slide as weighing down on mining shares and souring overall risk sentiment.

  • The pan-European FTSEurofirst 300 was down by 0.55% to 1,562.21
  • Germany’s DAX was down by 0.68% to 13,235.50
  • The blue-chip Euro Stoxx 50 was down by 0.72% to 3,615.50

U.S. equity futures were also suffering, reinforcing the idea that risk aversion was the prevailing sentiment in Europe.

  • S&P 500 futures were down by 0.44% to 2,841.00
  • Nasdaq futures were down by 0.47% to 6,959.75

Global bond yields retreat

Another sign that risk aversion was the name of the game in Europe was the strong demand for bond yields that dragged global bond yields lower after printing gains earlier.

  • German 10-year bond yield down by 0.87% to 0.684%
  • French 10-year bond yield down by 0.47% to 0.964%
  • U.K. 10-year bond yield down by 0.55% to 1.446%
  • U.S. 10-year bond yield down by 0.06% to 2.697% 2.733%

Major Market Mover(s):


The pound staged a broad-based recovery during the morning London session after getting a beat-down yesterday.

As mentioned earlier, there were no apparent catalysts, so we’re probably seeing month-end flows. Although it’s also possible that yesterday’s pound bears were covering their shorts ahead of BOE Guv’nah Carney’s testimony later.

GBP/USD was up by 120 pips (+0.86%) to 1.4117, GBP/JPY was up by 120 pips (+0.79%) to 153.39, GBP/CAD was up by 72 pips (+0.42%) to 1.7393


The Greenback erased its gains from earlier and resumed its longer-term slide. In fact, the Greenback was not only the worst-performing currency of the session – the Greenback is also now the weakest currency of the day (so far).

There were no direct catalysts for the Greenback’s slide. And aside from month-end flows, market analysts tried to pin the blame for the Greenback’s slide on retreating U.S. global bond yields.

EUR/USD was up by 72 pips (+0.58%) to 1.2427, AUD/USD was up by 53 pips (+0.66%) to 0.8098, NZD/USD was up by 51 pips (+0.70%) to 0.7334


The yen had really wonky price action during the morning London session since it was the second weakest currency after the Greenback.

And this is weird because risk aversion was the dominant sentiment in Europe and global bond yields were down to boot.

EUR/JPY was up by 68 pips (+0.51%) to 135.02, CHF/JPY was up by 51 pips (+0.44%) to 116.49, NZD/JPY was up by 50 pips (+0.63%) to 79.70

Watch Out For:

  • 2:00 pm GMT: S&P/CS Composite HPI (6.3% expected, 6.4% previous)
  • 3:00 pm GMT: CB’s U.S. consumer confidence (123.0 expected, 122.1 previous)
  • 3:30 pm GMT: BOE Guv’nah Mark Carney will testify before the House of Lords Economic Affairs Committee