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Hawkish comments from ECB’s Nowotny and BOE’s McCafferty respectively gave the euro and the pound a nice boost. The Greenback, meanwhile, ended up at the bottom of the forex heap.

  • French industrial production m/m: 1.2% vs. 1.4% expected, -1.8% previous
  • Italian industrial production m/m: -0.5% vs. 1.0% expected, -1.8% previous
  • NFIB U.S. small business index: 104.7 vs. 107.0 expected, 107.6 previous

Major Events/Reports:

ECB’s Nowotny speaks

ECB Governing Council Member Ewald Nowotny was interviewed by Reuters during the session. And Nowotny said that the ECB’s QE program “would be wound down by the end of this year,” as Reuters puts it.

Nowotny also said that the main refinancing rate, which is the ECB’s key policy rate, likely won’t be moving anytime soon, but he also said that:

“I would have no problem with moving [the deposit rate] from -0.4 percent to -0.2 percent as a first step and then, as a second step, include the [main refinancing] policy rate.”

Nowotny then added that “It’s too early to tell” when the ECB can start hiking rates.

Even so, Nowotny showed his hawkish feathers when he later said that:

“One of the strong arguments for moving perhaps a bit faster [with policy normalization] is exactly to have some room for maneuver if we should see some deterioration in the economic condition.”

“As we see it now, the markets are already expecting this development [ending the ECB’s QE program] … I don’t think there’s very much preparation needed.”

BOE’s McCafferty speaks

BOE MPC Member Ian McCafferty was speaking with Reuters earlier during the session. And he told Reuters this juicy bit:

“We shouldn’t dally when it comes to tightening policy modestly.”

This is not really surprising, though. After all, McCafferty did vote for a rate hike during the March 22 BOE statement.

McCafferty justified his hawkish view by noting that U.K.’s labor market has tightend further, resulting in higher wage growth, and then saying that:

“It’s not wages suddenly bursting away, but it gives you a modest upside risk [for inflation].”

More risk-taking in Europe

The major European quity indices raked in more gains during today’s morning London session, which means that the risk on vibes are here to stay for now.

And market analysts said that risk sentiment was sustained by Chinese President Xi Jinping’s comments earlier, which helped to ease trade war fears.

  • Germany’s DAX was up by 0.78% to 12,357.22
  • The blue-chip Euro Stoxx 50 was up by 0.54% to 3,431.55

U.S. equity futures also got a boost from the risk-on vibes.

  • S&P 500 futures were up by 1.16% to 2,649.50
  • Nasdaq futures were up by 1.46% to 6,592.00

Major Market Mover(s):


The euro was the top-performing currency of the morning London session, thanks to the onslaught of late buyers when ECB’s Nowotny mentioned that the ECB “would” be ending its QE program this year, with possible rate hikes to follow.

EUR/USD was up by 45 pips (+0.37%) to 1.2360, EUR/JPY was up by 35 pips (+0.27%) to 132.32, EUR/GBP was up by 16 pips (+0.19%) to 0.8721


The pound got an early boost thanks to hawkish commentary from BOE’s McCafferty.

What McCafferty said isn’t really new, though, which is likely why there wasn’t a lot of follow-through buying after the initial jump. In fact, the pound even began to give back some of its gains to the comdolls.

Even so, the pound was able to preserve to its gains (for now) and was therefore the second top-performing currency of the morning London session.

GBP/USD was up by 25 pips (+0.18%) to 1.4172, GBP/JPY was up by 15 pips (+0.10%) to 151.73, GBP/AUD was up by 32 pips (+0.18%) to 1.8316


The Greenback was the worst-performing of the morning London session. There were no catalysts, though, and the current narrative is that trade war fears are easing, which should also ease some of the bearish pressure on the Greenback.

Anyhow, some market analysts attributed the Greenback’s slide to the risk-on vibes after Xi Jinping’s speech since that improved risk sentiment and ramped up demand for higher-yielding currencies at the expense of the buck.

However, that doesn’t really explain why the Greenback was also vulnerable to the safe-havens yen and Swissy.

USD/JPY was down by 13 pips (-0.12%) to 107.04, USD/CHF was down by 29 pips (-0.31%) to 0.9544, USD/CAD was down by 18 pips (-0.14%) to 1.2663

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (219K expected vs. 230K previous)
  • 12:30 pm GMT: Canadian building permits (-1.5% expected vs. 5.6% previous)
  • 12:30 pm GMT: Headline (0.1% vs. 0.2% expected) and core (0.2% expected, same as previous) readings for U.S. PPI
  • 2:00 pm GMT: U.S. final wholesale inventories (0.8% expected v.s 1.1% previous)