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The euro and the Swissy were both taking hits during the morning London session. However, the Swissy was getting the worst of it likely because of the risk-on vibes. The pound, meanwhile, had a wobbly start but caught a bid later on and even ended up as the top-performing currency of the morning London session.

  • French final HICP m/m: unchanged at +1.1% as expected
  • French final HICP y/y: unchanged at +1.7% as expected
  • Euro Zone industrial production m/m: -0.8% vs. 0.1% expected, -0.6% previous

Major Events/Reports:

ECB’s meeting minutes

The minutes of the ECB’s most recent huddle were released late into the session. And reading quickly through the minutes, most of the stuff there weren’t really new.

Even so, there were some juicy bits here and there, such as the ECB expressing some concern about the euro’s relative strength.

To quote directly from the minutes (emphasis mine):

“[I]t was remarked that recent movements in the euro exchange rate seemed to relate more to relative monetary policy shocks, including communication, and less to improvements in the macroeconomic outlook for the euro area. This suggested that the exchange rate appreciation could be expected to have a more negative impact on inflation.”

“In addition, even though the effect of the euro’s appreciation on inflation had been limited so far, the pass-through could be stronger if the shocks turned out to be permanent.”

Overall, there was broad agreement among members that volatility in the exchange rate of the euro continued to be a source of uncertainty, which required monitoring with regard to its possible implications for the medium-term inflation outlook.”

This is not new, though, since ECB Overlord Draghi did say that the euro’s strenghth “might weigh on inflation down the line” during the March ECB presser.

Other than that, the minutes also reiterated the ECB’s somewhat neutral stance. If you can still recall, ECB Overlord Draghi said during the ECB statement that monetary policy is supposedly “reactive“.

Well, the minutes mentioned that:

“[I]t was also remarked that the removal of the easing bias should not be misunderstood as restricting the Governing Council’s capacity to react to shocks and contingencies, if necessary.”

In simpler terms, the removal of the ECB’s easing bias on its QE program is not a hawkish sign since the ECB is ready and willing to put it back on if economic conditions deteriorate.

Moreover, the ECB is trying to present a neutral policy stance because:

“[T]he broadly agreed conclusion was that the evidence for a sustained rise in inflation towards levels consistent with the Governing Council’s inflation aim was still not sufficient.”

Trump tweets

Another day, another tweet from Trump on the topic of Syria.

David Davis speaks

Brexit Secretary David Davis was giving a speech earlier and he touched upon the topic of Brexit.

To be more specific, Davis said that the U.K. and the E.U. are gunning for a final Brexit deal by October, including a post-Brexit trade framework.

However, both sides “have got to have the substance of the future relationship nailed down as well.” Otherwise, the U.K. won’t pony up the £39 billion demanded by the E.U.

Even so, Davis did say that the future trade framework will provide “quite a lot of detail.”

Davis also emphasized the benefits of Brexit, namely the “ability to strike free-trade deals elsewhere.”

Moreover, Davis told his listeners that the U.K.’s new immigration policy will result in “free movement of brain power,” which is supposedly good for businesses.

Sentiment flips back to risk-on

After an intense bout of risk aversion yesterday, risk appetite was revived during today’s morning London session, sending the major European equity indices higher.

And market analysts said that the risk-on vibes were mainly due to deal-making activities, which were able to offset some disappointing earnings updates and lingering jitters with regard to Syria.

  • The pan-European FTSEurofirst 300 was up by 0.31% to 1,479.83
  • Germany’s DAX was up up 0.48% to 12,352.38
  • The blue-chip Euro Stoxx 50 was up up 0.35% to 3,432.05

The risk-friendly vibes in Europe also gave U.S. equity futures a boost.

  • S&P 500 futures were up by 0.49% to 2,654.00
  • Nasdaq futures were up by 0.56% to 6,629.50

Major Market Mover(s):

EUR

The euro was already feeling some selling pressure ahead of the ECB minutes, likely because of the slide in industrial production in the Euro Zone. However, that selling pressure only intensified after the minutes were released.

EUR/USD was down by 41 pips (-0.33%) to 1.2321, EUR/CAD was down by 61 pips (-0.41%) to 1.5509, EUR/GBP was down by 42 pips (-0.50%) to 0.8674

CHF

The euro was weak but the Swissy was weaker. In fact, the Swissy was the worst-performing currency of the morning London session, very likely because of the risk-on vibes during the session.

USD/CHF was up by 43 pips (+0.46%) to 0.9634, NZD/CHF was up by 34 pips (+0.50%) to 0.7106, EUR/CHF was up by 15 pips (+0.12%) to 1.1871

GBP

The pound had a wobbly start, which market analysts blamed on technicals and profit-taking ahead of top-tier data next week.

However, the pound later caught a bid that pushed it higher across the board.  The exact catalysts is not yet clear, but the pound began finding buyers while David Davis was speaking, so easing Brexit-related uncertainty is a possible reason for the pound’s rebound.

GBP/USD was up by 23 pips (+0.16%) to 1.4204, GBP/JPY was up by 66 pips (+0.44%) to 152.23, GBP/CHF was up by 84 pips (+0.62%) to 1.3683

Watch Out For:

  • 12:30 pm GMT: Canada’s NHPI (0.1% expected vs. 0.0% previous)
  • 12:30 pm GMT: U.S. initial jobless claims (230.0K expected v s. 242.0K previous)
  • 4:00 pm GMT: Bundesbank President Jens Weidmann will speak
  • 7:00 pm GMT: BOE Governor Mark Carney is scheduled to speak