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The euro staged a broad-based recovery during the morning London session and was even the top-performing currency of the session, despite an apparent lack of catalysts and ahead of ECB Overlord Draghi’s scheduled speech.

The Greenback, meanwhile, was the biggest loser of the session. Like the euro, there was no apparent trigger for the Greenback’s moves. A bunch of Fed speakers are on the docket, though, so profit-taking after last week’s Greenback rally is a possibility.

  • Italian trade balance: €2.94B vs. €3.21B expected, €4.53B previous
  • Lots of central bank speakers later, including ECB Overlord Draghi

Major Events/Reports:

OPEC-related rumor

According to a Bloomberg report, “people briefed on the [OPEC] talks” claim that “OPEC members are discussing a compromise agreement that would see an oil production increase of between 300,000 and 600,000 barrels a day over the next few months.”

The report also goes on to say that one of the unnamed sources claimed that “Some OPEC members back increasing output by the lower end of the 300,000 to 600,000 barrel a day range.”

To put this into context, remember that Russian Energy Minister Alexander Novak said last week that OPEC Members will discuss increasing oil output by 1.5 million barrels of oil per day.

Assuming it’s the real deal, the Bloomberg report is therefore relatively goods news for the oil since the market was bracing itself for a much large increase in oil output.

  • U.S. WTI crude oil was up by 0.02% for the day to $64.86 per barrel after reaching an intraday low of $63.41
  • Brent crude oil was down by 0.94% for the day to $74.38 per barrel after reaching an intraday low of $72.46

Gloomy start in Europe

Europe is starting the new trading week where the previous trading week left off. And by that I mean that the major European equity indices were hit hard by selling pressure and were bleeding profusely.

And market analysts were quick to blame the feelings of doom and gloom on the escalating trade spat between the U.S. and China after the U.S. announced tariffs on Chinese goods to the tune of $50 billion last Friday (effective July 6), which prompted Beijing to announce that retaliatory measures.

  • The pan-European FTSEurofirst 300 was down by 0.98% to 1,506.29
  • Germany’s DAX was down by 1.39% to 12,831.30
  • The blue-chip Euro Stoxx 50 was down by 1.33% to 3,464.85

U.S. equity futures were also reeling in pain, signaling that the intense risk-off vibes may spill over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.64% to 2,766.75
  • Nasdaq futures were down by 0.73% to 7,227.75

Major Market Mover(s):

EUR

After sliding earlier, the euro staged a broad-based recovery and was the top-performing currency of the morning London session.

There were no apparent catalysts, but it’s possible that the euro may have been feeding off the Greenback’s weakness.

It’s also possible that some forex traders were covering their shorts, just in case ECB Overlord says something unexpected during his scheduled speech later.

EUR/USD was up by 37 pips (+0.32%) to 1.1610, EUR/GBP was up by 26 pips (+0.30%) to 0.8764, EUR/JPY was up by 30 pips (+0.24%) to 128.25

CHF

Despite the intense risk-off vibes, the safe-haven Swissy  was only the second top-performing currency of the session. It’s worth pointing out that the Swissy is the top-performing currency of the day (so far), though.

AUD/CHF was down by 19 pips (-0.25%) to 0.7407, NZD/CHF was down by 10 pips (-0.14%) to 0.6916, CAD/CHF was down by 18 pips (-0.25%) to 0.7551

USD

The Greenback was broadly weaker during the session. There was no clear reason why and market analysts were only stating the obvious when they pointed out that the Greenback was off its recent highs.

It’s possible, however, that some traders were taking profits off the table since a bunch of Fed officials are scheduled to give speeches later today.

Another possibility is that the Greenback was tracking the slide in U.S. bond yields.

Yet another possibility is that trade tensions between the U.S. and China is weighing down on the Greenback. But then again, if that were the case, then the Greenback should have started retreating when the trading week opened since there were no fresh trade-related news during the session.

USD/JPY was down by 9 pips (-0.09%) to 110.45, USD/CHF was down by 27 pips (-0.27%) to 0.9951, USD/CAD was down by 9 pips (-0.07%) to 1.3179

Watch Out For:

  • 12:45 pm GMT: New York Fed President William Dudley will speak
  • 1:00 pm GMT: U.S. Fed Governor Elizabeth Duke has a speech
  • 2:00 pm GMT: NAHB U.S. housing market index (steady at 70 expected)
  • 2:30 pm GMT: CB’s Australian leading index (0.2% previous)
  • 3:45 pm GMT: BOC Deputy Governor Lynn Patterson will speak
  • 5:00 pm GMT: Atlanta Fed President Raphael Bostic has a speech
  • 5:30 pm GMT: ECB Overlord Draghi is scheduled to speak
  • 8:00 pm GMT: San Francisco Fed President John Williams will speak