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Risk-taking is still the name of the game in today’s morning London session. And we saw a repeat performance of yesterday’s morning London session in that the Kiwi outpaced its peers (again) while the yen got stomped (again).

The euro is also noteworthy since it got an early boost but finished the session on a mixed note when selling pressure returned after the Euro Zone’s HICP report surprised to the upside.

  • Swiss GDP (q/q):0.6% vs. 0.5% expected, 0.6% previous
  • Nationwide’s U.K. HPI (m/m): -0.2% vs. 0.2% expected, same as previous
  • French preliminary HICP: 0.4% vs. 0.3% expected, 0.2% previous
  • Swiss retail sales: 2.2% vs. -1.4% expected, -1.1% previous
  • Italian jobless rate: 11.2% vs. 10.9% expected, 11.1% previous
  • U.K. net lending to individuals: £5.7B vs. £5.2B expected, £4.4B previous
  • U.K. mortgage approvals: 62.5K vs. 63.5K expected, 62.9K previous
  • Euro Zone flash HICP: 1.9% vs. 1.6% expected, 1.2% previous
  • Euro Zone flash core HICP: 1.1% vs. 1.0% expected, 0.7% previous
  • Jobless rate in the Euro Zone: 8.5% vs. 8.4% expected, 8.6% previous

Major Events/Reports:

Italy-related updates

There were reports related to Italian politics that were making the rounds during the session.

Most of them were minor updates, but there was a very interesting report from Corriere Della Sera which claimed that the 5-Star Movement and League are trying to reach a compromise with Italian President Sergio Mattarella by choosing the pro-euro Pierluigi Ciocca to replace the anti-euro Paolo Savona as economy minister. Savona, meanwhile, is slated to become the new foreign minister.

A Reuters report also noted that the League’s Matteo Salvini and the 5-Star Movement’s Luigi Di Maio will be meeting later today, likely to try and revive their plans to form a coalition government.

Euro Zone HICP

The flash estimate for the Euro Zone’s May HICP came in at 1.9% year-on-year, which is good news since the consensus was for a slower 1.6% increase. The reading in May is also stronger compared to the 1.2% increase reported in April.

More importantly, it’s already above the ECB’s forecast that headline HICP will increase by 1.4% year-on-year in 2018, as reported in the March Eurosystem/ECB Staff Macroeconomic Projections.

Moreover, HICP less energy, one of the ECB’s preferred measures for core inflation, improved from 1.1% to 1.4%. This is also beating the ECB’s forecast that HICP less energy will print a 1.2% annual increase by the end of the year.

As for HICP less energy and unprocessed food, another of the ECB’s preferred measures for core inflation, that also improved from 1.1% to 1.3%, which is also above the ECB’s 2018 forecast of +1.1%.

More risk-taking in Europe

The major European equity indices were raking in gains yet again during today’s morning London session, which is a sign that risk appetite is still the name of the game in Europe.

And market analysts say the risk-friendly vibes in Europe were due to optimism caused by China’s better-than-expected PMI readings, as well as growing expectations that Italy would be able to form a new coalition government and avoid fresh elections.

Not all of the major European equity indices were in the green, though, since Germany’s DAX was having a rather rough time due to slumping auto shares. And German auto shares were down in the dumps because of rumors that Trump wants to squeeze the German carmakers out of the U.S.

  • The pan-European FTSEurofirst 300 was up by 0.27% to 1,512.93
  • The U.K.’s FTSE 100 was up by 0.42% to 7,721.76
  • Germany’s DAX was down by 0.32% to 12,742.30
  • The blue-chip Euro Stoxx 50 was up by 0.42% to 3,445.25

U.S. equity futures were also slightly in the green, which implies that the risk-on vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were up by 0.05% to 2,725.75
  • Nasdaq futures were up by 0.08% to 6,992.50

Global bond yields rise

Another sign that risk-taking was the dominant sentiment in Europe was the broad-based rise in global bond yields.

  • German 10-year bond yield up by 7.12% to 0.376%
  • French 10-year bond yield up by 0.30% to 0.706%
  • U.K. 10-year bond yield up by 0.64% to 1.265%
  • U.S. 10-year bond yield up by 0.77% to 2.866%
  • Canadian 10-year bond yield up by 0.22% to 2.270%

Major Market Mover(s):


The higher-yielding Kiwi in the lead again. And we can likely thank the risk-friendly vibes in Europe for that.

NZD/USD was up by 19 pips (+0.27%) to 0.7013, NZD/CHF was up by 11 pips (+0.16%) to 0.6911, NZD/JPY was up by 31 pips (+0.41%) to 76.34


Rising bond yields and another risk-friendly session meant another rough time for the safe-haven yen.

USD/JPY was up by 22 pips (+0.21%) to 108.85, CHF/JPY was up by 57 pips (+0.53%) to 110.47, CAD/JPY was up by 37 pips (+0.44%) to 84.74


The euro got a broad-based boost at the start, apparently because of the news that the anti-euro Savona is no longer slate to be the next Italian economy minister.

However, the euro also got smacked lower later when the Euro Zone’s HICP report was released, which is rather wonky since the HICP readings exceeded the market’s expectations and is also beating the ECB’s own forecasts.

There’s no clear reason for this, but profit-taking is a possibility, given that it’s the end of the month, so some month-end capital flows are to be expected as hedge funds, mutual funds, pension funds, and other large players rebalance their portfolios and/or prepare to make cash distributions.

EUR/USD was up by 23 pips (+0.20%) to 1.1706 with 1.1723 as session high, EUR/JPY was up by 53 pips (+0.42%) to 127.43 with 127.71 as session high, EUR/GBP was down by 4 pips (-0.04%) to 0.8771 with 9,8791 as session high

Watch Out For:

  • 12:30 pm GMT: Canada’s monthly GDP (0.3% expected vs 0.4% previous)
  • 12:30 pm GMT: U.S. core PCE price index (0.1% expected vs. 0.2% previous), personal spending (0.4% expected, same as previous), and personal income (0.3% expected, same as previous)
  • 12:30 pm GMT: U.S. initial jobless claims (228K expected vs. 234K previous)
  • 1:45 pm GMT: Chicago PMI (58.3 expected vs. 57.6 previous)
  • 2:00 pm GMT: U.S. pending home sales (0.4% expected, same as previous)
  • 3:00 pm GMT: U.S. crude oil inventories (-0.4M expected vs. 5.8M previous)
  • 4:20 pm GMT: BOC Deputy Governor Sylvain Leduc will speak
  • 4:45 pm GMT: Atlanta Fed President Raphael Bostic has a speech
  • 5:00 pm GMT: U.S. Fed Governor Lael Brainard is scheduled to speak