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The euro got stomped during the morning London session, likely because of poor European data and growing fears over the souring trade relations between the E.U. and U.S.

One currency’s misery is another currency’s gain, however. In this case, it was the safe-haven yen that benefited the most. Although the Greenback also got a boost.

  • German industrial production m/m: -1.0% vs. 0.3% expected, 1.7% previous
  • German trade balance: €19.4B vs. €20.2B expected, €22.0B previous
  • French industrial production m/m: -0.5% vs. 0.3% expected, -0.4% previous
  • U.K. consumer inflation expectations: 2.9% as expected, same as previous

Major Events/Reports:

Poor German and French data

Germany and France released economic data that can be considered only as mid-tier at best.

Even so, they all disappointed and apparently had a bearish effect on the euro’s price action, which is kinda rare since the euro usually ignores economic data.

Anyhow, first to be released were Germany’s production report and trade report.

And unfortunately for the euro, Germany’s April production report revealed that total industrial production in Germany plunged by 1.0% month-on-month, contrary to expectations that it would rise by 0.3%.

Germany’s April trade report, meanwhile, revealed that Germany only printed a trade surplus of €19.4 billion in April, which is less than the expected €20.2 billion. Moreover, the weaker reading was due in part to exports falling by 0.3% month-on-month, a tick stronger than the expected 0.2% slide.

After that, France released its April production report. And while manufacturing output grew by 0.4% month-on-month in April, total industrial production fell by 0.5% because other sectors experienced weaker output, with the 2.3% plunge in construction output being the biggest drag.

Trump tweets (about trade)

U.S. President Trump was up early today and he tweeted the following:

He also took a swing specifically at Canada via this tweet.

Commodities retreat

Most commodities encountered selling pressure during the morning London.

And we can probably blame that on the Greenback’s broad-based recovery. After all, a stronger Greenback means that globally-traded commodities become relatively more expensive, especially for market players who hold non-USD currencies.

And just for reference, the U.S. dollar index was up by 0.34% to 93.75 for the day when the session ended. In fact, the Greenback also happened to be the second best-performing currency of the session, second only to the yen.

Aside from Greenback strength, market analysts also blamed the slide in oil prices on weaker Chinese demand and higher U.S. oil output.

The prospect of higher supply, meanwhile, led to the slide in some base metals, market analysts say.

Precious metals were leaking red despite the risk-off vibes.

  • Gold was down by 0.03% to $1,302.70 per troy ounce
  • Silver was down by 0.48% to $16.735 per troy ounce

Oil benchmarks were also bleeding out.

  • U.S. WTI crude oil was down by 0.47% to $65.64 per barrel
  • Brent crude oil was down by 0.89% to $76.63 per barrel

Base metals were mostly in the red.

  • Copper was down by 0.09% to $3.272 per pound
  • Tin was down by 0.60% to $21,165.00 per dry metric ton

Risk-off ending in Europe

The major European equity indices opened on a weaker note and then plumbed new intraday lows as the session took its course. Europe is therefore apparently closing out the week on a rather downbeat note.

And market analysts say that the risk-off vibes were due to poor German economic data and souring trade relations between the E.U. and the U.S., which gave German stocks a good beating and soured overall risk sentiment.

  • The pan-European FTSEurofirst 300 was down by 0.66% to 1,499.19
  • Germany’s DAX was down by 1.04% to 12,678.32
  • The blue-chip Euro Stoxx 50 was down by 0.60% to 3,441.05

The risk-off vibes also dented U.S. equity futures, hinting that the risk-off vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.59% to 2,756.00
  • Nasdaq futures were down by 0.98% to 7,091.00

Global bond yields fall

Another sign that risk aversion was the prevalent sentiment is the strong demand for bonds that caused global bond yields to fall.

  • German 10-year bond yield down by 12.07% to 0.430%
  • French 10-year bond yield down by 4.07% to 0.797%
  • U.K. 10-year bond yield down by 2.22% to 1.368%
  • U.S. 10-year bond yield down by 0.55% to 2.917%
  • Canadian 10-year bond yield down by 0.48% to 2.273%

Major Market Mover(s):

EUR

The euro got whipped during the morning London session, likely because of poor economic data from Germany and France, as well as growing fears over the souring trade relations between the E.U. and U.S.

Other than that, it’s also possible that we’re just seeing some profit-taking by EUR bulls ahead of next week’s ECB statement. After all, the euro did have a good run this week.

EUR/USD was down by 57 pips (-0.49%) to 1.1748, EUR/JPY was down by 91 pips (-0.70%) to 128.54, EUR/NZD was down by 56 pips (-0.33%) to 1.6727

JPY

Risk-off vibes and falling bond yields meant good times for the safe-haven yen.

USD/JPY was down by 25 pips (-0.23%) to 109.41, AUD/JPY was down by 43 pips (-0.53%) to 82.99, GBP/JPY was down by 66 pips (-0.45%) to 146.55

USD

The Greenback was the second best-performing currency of the morning London session.

There were no apparent catalysts, but it’s possible that the Greenback was acting as a safe-haven, benefiting mainly at the euro’s expense.

Other than that, it’s possible that USD bears were just covering their short before the week ends.

GBP/USD was down by 30 pips (-0.22%) to 1.3394, NZD/USD was down by 8 pips (-0.11%) to 0.7022, AUD/USD was down by 23 pips (-0.31%) to 0.7585

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (219K expected vs. 215K previous)
  • 12:30 pm GMT: Canada’s net employment change (19.1K expected vs. -1.1K previous) and jobless rate (steady at 5.8% expected); read Forex Gump’s Event Preview
  • 12:30 pm GMT: Canada’s capacity utilization rate (86.4% exected vs. 86.0% previous)
  • 2:00 pm GMT: U.S. final wholesale inventories (0.0% expected, same as previous)