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The safe-haven Swissy had a tough time during the session, likely because of the returning risk-on vibes in Europe. Although it’s also worth noting that the other European currencies were treading water (and even drowning a bit).

The Greenback, meanwhile, edged out the Loonie to emerge as the top-performing currency of the morning London session.

  • German industrial production (m/m): -0.6% as expected, 3.1% previous
  • French trade balance: -€3.47B vs. -€4.85B expected, -€5.69B previous
  • Swiss foreign currency reserves: CHF 731B expected vs. CHF 744B previous
  • Halifax U.K. HPI (3m y/y): 2.2% vs. 2.4% expected, 2.7% previous
  • Halifax U.K. HPI (m/m): -0.6% vs. 0.2% expected, -0.6% previous
  • Italian retail sales (m/m): -0.3% vs. -0.1% expected, 1.1% previous
  • RBNZ statement later

Major Events/Reports

German coalition deal

News broke out earlier that German Chancellor Angela Merkel’s Christian Democrats (CDU) and Christian Social Union (CSU) allies have finally hammered out a deal with the center-left Social Democratic Party (SPD).

The full details of the deal have yet to be officially revealed. But word on the street is that Merkel was forced to give large concessions to make SPD play along and finally agree to form a government.

Dallas Fed’s Kaplan speaks

Dallas Fed President Robert Kaplan, a non-voting FOMC member, gave a speech earlier. And he first talked about the labor market thus:

“If you have significant enough overshoot of full employment, history shows that usually other excesses and imbalances build.”

Kaplan then had this to say about the future direction of monetary policy:

“It’d be wise for us to be removing accommodation, although in a patient and gradual manner.”

Risk appetite makes a comeback in Europe

The feelings of doom and gloom in Europe finally went away and risk-taking apparently made a strong since the major European equity indices were broadly well in the green during the morning London session.

And market analysts say the risk sentiment in Europe finally turned for the better because of positive earnings results and earlier news that the CDU/CSU under German Chancellor Angel Merkel have finally hammered a coalition deal with the center-left SPD.

  • The pan-European FTSEurofirst 300 was up by 1.04% to 1,477.83
  • Germany’s DAX was up by 0.81% to 12,492.50
  • The blue-chip Euro Stoxx 50 was up by 0.74% to 3,418.50

Major Market Mover(s):


The safe-haven Swissy took hits across the board, very likely because of the returning risk-on vibes in Europe. Although SNB meddling is also a usual suspect.

USD/CHF was up by 56 pips (+0.61%) to 0.9406, NZD/CHF was up by 35 pips (+0.51%) to 0.6873, AUD/CHF was up by 42 pips (+0.57%) to 0.7402


The Greenback was uniformly stronger during the early morning London session after a mixed performance earlier. In fact, the Greenback managed to edge out the resilient Loonie to emerge as the top-performing currency of the session.

As for the catalyst, that’s not really very clear. Dallas Fed President Kaplan did  say some cautiously hawkish things during the session. However, the Greenback was already on its way up before Kaplan even got to speak.

GBP/USD was down by 48 pips (-0.35%) to 1.3906, EUR/USD was down by 39 pips (-0.33%) to 1.2341, NZD/USD was down by 11 pips (-0.15%) to 0.7305

Watch Out For:

  • 1:30 pm GMT: Canadian building permits (2.1% expected, -7.7% previous)
  • 1:30 pm GMT: New York Fed President William Dudley is scheduled to speak
  • 3:30 pm GMT: U.S. crude oil inventories (3.2M expected, 6.8M previous)
  • 8:00 pm GMT: RBNZ monetary policy statement (OCR unchanged at 1.75% expected)
  • 8:00 pm GMT: U.S. consumer credit ($19.9B expected, $28.0B previous)
  • 9:00 pm GMT: RBNZ presser
  • 10:20 pm GMT: San Francisco Fed President John Williams will speak