Euro and pound weakness were initially the main themes during the session, with the euro’s weakness being blamed on the Greenback’s strength, the trade spat between the E.U. and U.S., political troubles in Germany, and uncertainty ahead of the E.U. Summit, according to market analysts.
The pound, meanwhile, was under pressure because of weaker rate hike expectations because of incoming BOE MPC Member Haskel’s comments yesterday, market analysts say.
However, it was the safe-haven yen that ultimately ended up at the bottom of the forex heap, thanks to a torrent of selling pressure after a rumor made the rounds that Trump supposedly decided against measures that would have strangled Chinese investment and likely escalate trade tensions.
Incidentally, the positive trade-related news caused all the comdolls to jump higher, with the Aussie claiming the top spot. The news also gave the Greenback a boost, but the comdolls apparently got more buyers (for now).
- Nationwide U.K. HPI m/m: 0.5% vs. 0.3% expected, -0.2% previous
- French consumer confidence: 97.0 vs. steady at 100.0 expected
- Credit Suisse economic expectations: 8.0 vs. 28.0 previous
- Euro Zpne private loans y/y: 2.9% vs. 3.0% expected, 2.9% previous
- CBI’s realized sales in the U.K.: 32 vs. 10 expected, 11 previous
- RBNZ statement later
Trump softened stance on Chinese investments (maybe)
According to a CNBC report that cited an unnamed “senior administration official” and a separate report from The New York Times that cited anonymous “administration officials”, Trump has supposedly decided against measures meant to protect U.S. intellectual property from Chinese theft, namely his plan to block Chinese and partially Chinese-owned companies from investing in some U.S. companies.
Instead, Trump will supposedly use relatively more moderate measures to protect U.S. technology.
As for details, CNBC cited the unnamed source as saying that:
“In the end the president and his advisers settled on the idea that we have a strong and effective mechanism through the CFIUS [Committee on Foreign Investment in the United States] process.. and that is a mechanism that can be used in the flexible and aggressive way to combat the practices that are troubling to the president.”
If true, then Trump’s decision is good for global trade and China’s growth since Trump’s planned measures were deemed to be much more punitive and were likely to elicit a response from China and escalate trade tensions even further.
Risk appetite returns
The major European equity indices had a mixed start but risk aversion apparently prevailed since they eventually plumbed intraday lows.
Buyers launched a major offensive near the end, though, causing the major European equity indices to erase their losses and then some.
Anyhow, the risk-off vibes from earlier were blamed by market analysts on trade war fears.
As for the influx of late buyers, that was apparently a reaction to the trade-related report I mentioned earlier, wherein Trump supposedly adopted measures for protecting U.S. technology that are less harsh than his original plans.
- The pan-European FTSEurofirst 300 was up by 0.71% to 1,484.95 after reaching an intraday low of 1,464.02
- Germany’s DAX was up by 0.90% to 12,343.04 after reaching an intraday low of 12,126.80
- The blue-chip Euro Stoxx 50 was up by 0.49% to 3,390.65 after reaching an intraday low of 3,340.65
Major Market Mover(s):
The yen was the second strongest currency of the morning London session after the Greenback.
I say “was” because the yen was rushed by late sellers and was the biggest loser of the session, thanks to that report about Trump’s supposed softer measures came out, causing bond yields to rise and reviving risk appetite.
USD/JPY was up by 35 pips (+0.32%) to 110.18, CHF/JPY was up by 4 pips (+0.04%) to 111.02, CAD/JPY was up by 36 pips (+0.44%) to 82.89
That report about Trump’s supposedly softer measures against China may have been bad for the yen, but it was great for all the comdolls (AUD, NZD, CAD), with the Aussie getting the biggest boost.
USD/CAD was down by 15 pips (-0.12%) to 1.3291, GBP/CAD was down by 77 pips (-0.44%) to 1.7531, EUR/CAD was down by 66 pips (-0.43%) to 1.5456
NZD/USD was up by 8 pips (+0.12%) to 0.6826, NZD/CHF was up by 26 pips (+0.38%) to 0.6776, NZD/JPY was up by 29 pips (+0.39%) to 75.22
AUD/USD was up by 17 pips (+0.23%) to 0.7401, AUD/CHF was up by 39 pips (+0.54%) to 0.7345, AUD/JPY was up by 45 pips (+0.56%) to 81.54
Watch Out For:
- 12:30 pm GMT: Headline (-1.0% expected vs. -1.6% previous) and core (0.5% expected vs. 0.9% previous) readings for U.S. durable goods orders
- 12:30 pm GMT: U.S. goods trade balance (-$68.9B expected vs. -$67.3B previous)
- 12:30 pm GMT: U.S. preliminary wholesale inventories (0.2% expected vs. 0.1% previous)
- 1:00 pm GMT: SNB’s quarterly bulletin will be released
- 1:00 pm GMT: CB’s Chinese leading index (1.5% previous)
- 2:30 pm GMT: U.S. crude oil inventories (-2.4M expected, -5.9M previous)
- 3:00 pm GMT: U.S. Fed Governor Randal Quarles is scheduled to speak
- 7:00 pm GMT: BOC Guv’nah Stephen Poloz will speak
- 9:00 pm GMT: RBNZ monetary policy statement (OCR steady at 1.75% expected); read Forex Gump’s Event Preview