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The yen’s domination against its peers is still unchallenged since the yen only extended its gains during the morning London session.

As for other currencies of note, we have the Kiwi, which got swamped by sellers during the session, and the Swissy, which was the second strongest currency of the session, despite the SNB’s promise (or threat) to “remain active in the foreign exchange market as necessary” (*cough* currency manipulator *cough*).

  • French final HICP m/m: 0.0% vs. no change from -0.1% expected
  • French final HICP y/y: unchanged at 1.3% as expected
  • Swiss PPI m/m: 0.3% vs. 0.2% expected, 0.3% previous
  • SNB Libor rate: unchanged at -0.75% as expected
  • SNB sight deposits rate: unchanged at -0.75% as expected
  • The Swissy “remains highly valued” according to SNB

Major Events/Reports:

Kudlow! I choose you!

Trump, the president of the free world, is already up and tweeting. And his first tweet of the day is to announce that Larry Kudlow will replace Garry Cohn as the Donald’s top economic adviser. Not really surprising, though, since there have been rumors making the rounds and Trump himself has said that Kudlow was favored to replace Cohn. While Kudlow has been cited as saying since yesterday that he will accept the job.

SNB monetary policy decision

As widely expected (and as usual), the Swiss National Bank (SNB) announced earlier that it decided to maintain its current monetary policy.

The target range for the Libor rate is therefore still between -1.25% and -0.25%, with the median target rate at -0.75%. Meanwhile, the interest rate on sight deposits was also unchanged at -0.75%.

Other than that, the SNB pointed out that “Since the last monetary policy assessment in December, the Swiss franc has appreciated slightly overall on the back of the weaker US dollar.” The SNB therefore thinks that the Swissy “remains highly valued.”

Also as usual, the SNB renewed its pledge to “remain active in the foreign exchange market as necessary” (*cough* currency manipulator *cough*) because that and the SNB’s negative rates keep “the attractiveness of Swiss franc investments low and eases pressure on the currency.”

SNB’s Jordan speak

In an interview after the SNB statement, SNB Boss-Man Jordan warned about a potential trade war when he said that:

“The risks have not materialised yet, but if international trade doesn’t function well, that is damaging for everyone.”

Jordan also had this to say, which obviously implies that he doesn’t want the Swissy to get bid up:

“Safe havens are sought when there are political uncertainties or big changes in the financial markets. This can be triggered by protectionism.”

Risk-taking prevails in Europe (for now)

The major European equity indices had a strong start and then captured even more gains early on, which implies that risk-taking was the dominant sentiment in Europe.

However, signs of risk aversion began to show up later on since the major European equity indices halted their advance, with some holding steady while other gave back some of their gains.

The European bourses were able to close out the session in positive territory, though, so risk-taking apparently prevailed… for now at least.

The earlier risk-on vibes were attributed by market analysts on the relief buying due to the lack of trade war rhetoric, as well as genuine demand due to positive results for some European companies.

Those same market analysts warned that there were lingering trade war fears, however, which is likely why gains were capped during the session.

  • The pan-European FTSEurofirst 300 was up by 0.20% to 1,469.02
  • Germany’s DAX was up by 0.26% to 12,268.21
  • The blue-chip Euro Stoxx 50 was up by 0.24% to 3,400.50

U.S. equity futures also raked in gains early on before surrendering most of them, barely clinging to their gains by the end.

  • S&P 500 futures were up by 0.09% to 2,756.50
  • Nasdaq futures were up by 0.02% to 7,059.00

Global bond yields slide

Global bond yields rose at the start of the session when risk appetite dominated before sliding back down when signs of risk aversion began to return.

Unlike the European equity indices, however, bond yields were already in negative territory by the end of the session.

  • German 10-year bond yield down by 2.72% to 0.576%
  • French 10-year bond yield down by 0.37% to 0.830%
  • U.K. 10-year bond yield down by 0.76% to 1.429%
  • U.S. 10-year bond yield down by 0.06% to 2.815%
  • Canadian 10-year bond yield down by 0.09% to 2.158%

Major Market Mover(s):


The yen extended its gains during the morning London session and is presently the best-performing currency, not just of the session, but of the trading day as well.

There were signs of risk-taking in Europe during the session. However, there were also signs of lingering trade war fears. And that, plus the slide in global bond yields, likely helped to sustain the yen’s advance against its peers.

USD/JPY was down by 10 pips (-0.10%) to 105.97, GBP/JPY was down by 64 pips (-0.43%) to 147.62, AUD/JPY was down by 30 pips (-036%) to 83.14


The Kiwi was the worst-performing currency of the session. There were no direct catalysts for the Kiwi’s weakness, but it’s very likely that the Kiwi was taking directional cues from risk sentiment since the Kiwi began to slide when signs of returning risk-aversion also began to show.

NZD/USD was down by 28 pips (-0.39%) to 0.7289, NZD/CAD was down by 22 pips (-0.23%) to 0.9457, NZD/JPY was down by 37 pips (-0.47%) to 77.26


The Swissy edged out a win from the Greenback and was the second best-performing currency of the session after the yen, despite the SNB’s decision to maintain its loose monetary policy as well as the SNB’s promise to intervene in the forex market.

Anyhow, the safe-haven Swissy, like the yen, was likely boosted by the lingering trade war jitters.

USD/CHF was down by 2 pips (-0.02%) to 0.9454, NZD/CHF was down by 20 pips (-0.29%) to 0.6898, AUD/CHF was down by 11 pips (-0.14%) to 0.7426

Watch Out For:

  • 12:30 pm GMT: ADP’s Canadian non-farm employment change (10.7K previous)
  • 12:30 pm GMT: Empire State manufacturing index (14.9 expected, 13.1 previous)
  • 12:30 pm GMT: Philadelphia Fed manufacturing index (23.0 expected, 25.8 previous)
  • 12:30 pm GMT: U.S. initial jobless claims (228K expected, 231K previous)
  • 12:30 pm GMT: U.S. import prices (0.3% expected, 1.0% previous)
  • 2:00 pm GMT: NAHB U.S. housing market index (steady at 72 expected)
  • 9:30 pm GMT: Business NZ manufacturing index (55.6 previous)