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The pound really suffered during the morning London session, thanks to renewed Brexit-related jitters after the E.U.’s draft withdrawal agreement was released.

Meanwhile, the Aussie and the yen were fighting for the top spot, since the former was likely tracking the rise in gold prices while the latter got a boost from the risk-off vibes.

  • German GFK consumer climate: 10.8 as expected vs. 11.0 previous
  • Consumer spending in France m/m: -1.9% vs. 0.5% expected, -1.2% previous
  • French preliminary HICP y/y: 1.4% vs. 1.5% expected, same as previous
  • French Q4 GDP q/q: 0.6% as expected, same as previous
  • KOF Swiss economic barometer: 108.0 vs. 106.0 expected, 107.6 previous=
  • Credit Suisse economic expectations: 25.8 vs. 34.5 previous
  • Euro Zone flash HICP y/y: 1.2% as expected, 1.3% previous
  • Euro Zone flash core HICP y/y: 1.0% as expected, same as previous

Major Events/Reports:

Draft Withdrawal Agreement released

The draft of the European Commission’s withdrawal agreement with the U.K. was released earlier.

And a quick read through the 119-page document gives a rather not-so-friendly tone.

The provision that most analysts quickly highlighted is Chapter III, Article 3: Establishment of a common regulatory area.

To quote directly from the document:

“A common regulatory area comprising the Union and the United Kingdom in respect of Northern Ireland is hereby established. The common regulatory area shall constitute an area without internal borders in which the free movement of goods is ensured and North-South cooperation protected in accordance with this Chapter.”

The U.K. won’t find this provision very palatable. In fact, a host of politicians already gave the divorce draft a tongue-lashing.

Senior DUP member Sir Jeffrey Donaldson was quoted as saying that:

“If the EU or Dublin believes the UK government will be signing up to a border in the Irish Sea, they are deluded.”

British foreign secretary Boris Johnson, meanwhile, quipped that:

“What is going on at the moment is that the issue of the Northern Irish border is being used quite a lot politically to try and keep the UK in the customs union – effectively the single market – so we cannot really leave the EU.”

British PM Theresa May, for her part, reacted to this provision by saying late into the session that “no UK prime minister could ever agree” to that.

Going back to the document, other provisions that the U.K. won’t like and will likely be a source of friction include the U.K. being forced to submit to E.U. court ruling until 2030.

Moreover, there were no provisions on extending the transition period beyond the December 31, 2020 deadline.

Precious metals rise as other commodities fall

Most commodities were taking hits during the morning London session. Precious metals were an exception though, since they remained resilient and even raked in some gains.

The U.S. dollar index is up by 0.02% for the day, which may have helped to dampen demand for commodities.

However, market analysts also blamed China’s poor data for the poor performance of base metals today.

Base metals were down.

  • Copper was down by 0.61% to $3.167 per pound
  • Nickel was down by 0.49% to $13,770.00 per dry metric ton

Oil benchmarks were also in negative territory.

  • U.S. WTI crude oil was down by 0.16% to $62.91 per barrel
  • Brent crude oil was down by 0.11% to $66.45 per barrel

As mentioned earlier, precious metals were doing okay.

  • Gold was up by 0.20% to $1,321.30 per troy ounce
  • Silver was up by 0.12% to $16.365 per troy ounce

More risk aversion in Europe

The major European equity indices were hit by another wave of risk aversion that sent them deeper into the red during today’s morning London session.

And market analysts say that the risk-off vibes was largely due to New Fed Chair Powell’s hawkish testimony yesterday since Powell hinted at the possibility of four rate hikes, which would mean tighter financial conditions, making credit harder to come by.

  • The pan-European FTSEurofirst 300 was down by 0.43% to 1,491.66
  • Germany’s DAX was down by 0.33% to 12,449.42
  • The blue-chip Euro Stoxx 50 was down by 0.23% to 3,446.50

Global bond yields slide

Another sign that risk aversion was the dominant sentiment in Europe was the broad-based slide in global bond yields during the session.

  • German 10-year bond yield down by 1.47% to 0.669%
  • French 10-year bond yield down by 2.09% to 0.932%
  • U.K. 10-year bond yield down by 2.37% to 1.525%
  • U.S. 10-year bond yield down by 0.56% to 2.892%
  • Canadian 10-year bond yield down by 0.57% to 2.259%

Major Market Mover(s):


The pound was rushed by sellers after the draft withdrawal agreement was released and British politicians began to react negatively, which likely reignited Brexit-related jitters.

GBP/USD was down by 75 pips (-0.54%) to 1.3820, GBP/JPY was down by 98 pips (-0.65%) to 147.81, GBP/AUD was down by 123 pips (-0.69%) to 1.7685


The yen outperformed its peers during the morning London session, very likely because of the risk-off vibes and slide in global bond yields.

USD/JPY was down by 13 pips (-0.13%) to 106.95, CAD/JPY was down by 14 pips (-0.16%) to 83.71, CHF/JPY was down by 38 pips (-0.34%) to 113.41


The yen may have done well during the session. However, the higher-yielding Aussie held its ground against the yen and even edged out a win near the end to emerge as the top-performing currency of the session.

There weren’t really any apparent catalysts for the Aussie’s strength. Gold was on the rise, though, and the Aussie was likely taking directional cues from the rise in gold prices.

AUD/USD was up by 18 pips (+0.23%) to 0.7814, AUD/CHF was up by 26 pips (+0.36%) to 0.7358, AUD/CAD was up by 18 pips (+0.19%) to 0.9983

Watch Out For:

  • 1:30 pm GMT: Canada’s RMPI (1.8% expected, -0.9% previous) and IPPI (0.5% expected, -0.1% previous)
  • 1:30 pm GMT: U.S. preliminary GDP (downgrade from 2.6% to 2.5% expected)
  • 2:45 pm GMT: Chicago PMI (64.6 expected, 65.7 previous)=
  • 3:00 pm GMT: U.S. pending home sales (0.5% expected, 0.5% previous)
  • 3:30 pm GMT: U.S. crude oil inventories (2.4M expected, -1.6M previous)