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There wasn’t really much that went on during the morning London session, so we saw an extension of the themes from earlier, namely EUR and GBP strength, as well as USD and JPY weakness.

  • Japanese preliminary machine tool orders y/y: 22.0% vs. 28.1% previous
  • Central bankers will be speaking later

Major Events/Reports:

ECB’s Villeroy speaks

ECB Executive Board Member Francois Villeroy de Galhau was interviewed by Bloomberg earlier.

And Villeroy said during the interview that announcing an end to the ECB’s QE program this year was “not a deep existential question,” which is a heavy hint that the ECB may be ending its QE program before the year ends.

Villeroy was also asked about a potential rate hike in relation to the ECB’s forward guidance that interest rates would “remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.”

And Villeroy had this to say:

“As far as the first rate hike is concerned, we could give additional guidance on its timing, ‘well past’ meaning at least some quarters but not years, and additional guidance on its contingency on the inflation outlook.”

“We’ll see exactly how we formulate it. We’re predictable, and it’s a clear virtue of our gradual normalization path, but we are not precommitted.”

Gloomy start in Europe

The major European equity indices were broadly in the red, so Europe is apparently starting the new trading week on a pessimistic note.

And according to market analysts, the gloomy vibes in Europe were due to weak demand for energy and financial shares, thanks to oil prices coming off their highs and poor earnings reports respectively.

Although deal-making activity and easing trade tensions between the U.S. and China supposedly helped to limit the losses.

  • The pan-European FTSEurofirst 300 was down by 0.20% to 1,536.03
  • Germany’s DAX was still up by 0.36% to 12,954.11
  • The blue-chip Euro Stoxx 50 was down by 0.26% to 3,556.45

Global bond yields jump

Global bond yields were on the rise, with European bond yields leading the way. And that’s despite the risk-off vibes in the European equities market.

And market analysts say that European bond yields jumped mainly because of Villeroy’s comments from earlier.

  • German 10-year bond yield up by 5.52% to 0.593%
  • French 10-year bond yield up by 3.53% to 0.822%
  • U.K. 10-year bond yield up by 2.22% to 1.471%
  • U.S. 10-year bond yield up by 0.38% to 2.982%
  • Canadian 10-year bond yield up by 1.05% to 2.403%

Major Market Mover(s):


The euro was the top-performing currency of the morning London session and is also the best-performing currency of the day (so far).

Market analysts mainly attributed the euro’s strength on the Greenback’s weakness. However, euro pairs did get a noticeable bullish kick when Villeroy gave his hawkish comments.

EUR/USD was up by 29 pips (+0.24%) to 1.1985, EUR/JPY was up by 35 pips (+0.27%) to 131.23, EUR/AUD was up by 22 pips (+0.14%) to 1.5862


The pound barely is the second strongest currency of the session (and of the day for that matter).

And like the euro, market analysts attributed the pound’s strength to the Greenback’s weakness, although preemptive positioning ahead of this week’s U.K. jobs report was also cited.

GBP/USD was up by 37 pips (+0.27%) to 1.3587, GBP/AUD was up by 34 pips (+0.19%) to 1.7985, GBP/JPY was up by 44 pips (+0.30%) to 148.78


The Greenback extended its slide during the session. There weren’t really any fresh catalyts, but some market analysts blamed the Greenback’s slide on growing doubts over the sustainability of the Greenback’s rally, as well as worries over the U.S. budget deficit.

USD/CHF was down by 18 pips (-0.19%) to 0.9981, USD/CAD was down by 26 pips (-0.20%) to 1.2759, USD/JPY was down by 2 pips (-0.02%) to 109.48


The yen was the second weakest currency of the session despite the risk-off vibes in Europe. And that may be because yen pairs were taking more directional cues from the rise in global bond yields.

CHF/JPY was up by 23 pips (+0.21%) to 109.70, CAD/JPY was up by 19 pips (+0.23%) to 85.82, AUD/JPY was up by 11 pips (+0.12%) to 82.73

Watch Out For:

  • 1:40 pm GMT: St. Louis Fed President James Bullard will speak
  • 4:15 pm GMT: ECB Board Member and Chief Economist Peter Praet is scheduled to speak
  • 5:45 pm GMT: ECB Benoît Coeuré will be giving a speech