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The euro was the one currency to rule them all during today’s morning London session, likely because of mostly positive inflation reports from Spain, Italy, and Germany.

The Kiwi, meanwhile, was the one currency that got trampled by all, likely because of the risk-off vibes and lingering disappointment after the RBNZ’s cautious monetary policy announcement.

  • GFK German consumer climate: 10.7 vs. 10.6 expected, 10.7 previous
  • German preliminary HICP y/y: 2.1% as expected vs. 2.2% previous
  • Spanish flash HICP y/y: 2.3% as expected vs. 2.1% previous
  • Italian preliminary HICP y/y: 1.5% vs. 1.4% expected, 1.0% previous
  • Euro Zone business climate: 1.39 vs. 1.40 expected, 1.44 previous
  • Euro Zone consumer confidence: -0.5 as expected vs. 0.2 previous

Major Events/Reports:

Spanish, Italian, and German inflation reports

Spain, Italy, and Germany released their respective preliminary inflation report earlier. And they were positive overall and pointed to a pickup in inflation for the Euro Zone as a whole.

As for the deets, Spain released its June HICP report first and it printed a 2.3% year-on-year increase, which is within expectations and is stronger than the +2.1% recorded back in May. Moreover, the +2.3% reading is the strongest annual reading since March 2017.

Next up was Italy’s June HICP report, which revealed that headline HICP accelerated from 1.0% year-on-year to 1.5%, which is a tick faster than the expected 1.4% increase. Even better, the 1.5% annual increase in June is the best reading since June 2017, so a one-year high basically.

Lastly, Germany released its June HICP report, showing that headline HICP weakened to 2.1% from 2.2%, which is the shared strongest reading since March 2017. On a slightly more upbeat note, the downtick was within expectations.

ECB’s economic bulletin

The ECB released its economic bulletin earlier during the session. And it basically reiterated ECB Overlord Draghi’s message during the June 14 ECB statement and presser.

As for details, the report noted that:

“The euro area economic expansion remains solid and broad-based across countries and sectors, despite recent weaker than expected data and indicators.”

However, the report also warned about external risks when it noted that:

“The balance of risks for global activity has worsened in recent weeks, with risks judged to be balanced in the short term but skewed to the downside in the medium term.”

Still, the report pointed out that the ECB thinks that “The ongoing solid and broad-based economic growth is expected to continue.”

And that’s why the ECB decided to taper its QE program from €30 billion per month to €15 billion come September “and then end net purchases” by September.

The economic bulletin still has that disappointing forwarg guidance that:

“[T]he Governing Council decided to keep the key ECB interest rates unchanged and expects them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with its current expectations of a sustained adjustment path.”

Australia cracks down on foreign meddling

The Australian Parliament passed laws earlier that are meant to prevent foreign interference in the country.

The laws were proposed by Prime Minister Malcolm Turnbull last December.

And while the new laws didn’t single out a foreign country, the laws are apparently meant to deter China’s … alleged questionable activities, namely political and industrial espionage.

The new laws don’t include measures meant to curb Chinese “political donations,” though. Prime Minister Malcolm Turnbull said those will come later.

Risk-off day in Europe

The major European equity indices were broadly in the red today, so risk aversion was apparently the name of the game in Europe.

And according to market analysts, the downbeat vibes in Europe were due to persistent trade-related jitters and skittishness because of the uncertainty surrounding the E.U. summit.

  • The pan-European FTSEurofirst 300 was down by 0.68% to 1,476.39
  • Germany’s DAX was down by 1.09% to 12,214.36
  • The blue-chip Euro Stoxx 50 was down by 0.65% to 3,372.75

Major Market Mover(s):

EUR

The euro was the top-performing currency of the morning London session. And the euro’s uphill trek apparently started when Spain released its better-than-expected inflation report.

The euro’s rally was then sustained when Italy also released a better-than-expected inflation report, before appearing to stall when Germany’s inflation report showed that headline HICP ticked lower as expected.

EUR/USD was up by 46 pips (+0.40%) to 1.1586, EUR/AUD was up by 46 pips (+0.30%) to 1.5776, EUR/NZD was up by 80 pips (+0.47%) to 1.7137

NZD

The higher-yielding Kiwi was the worst-performing currency of the morning London session, likely because of the risk-off vibes. Although it’s also possible that lingering disappointment over the RBNZ’s cautious tone may have sapped demand for the Kiwi.

NZD/USD was down by 18 pips (-0.27%) to 0.6760, NZD/JPY was down by 13 pips (-0.18%) to 74.51, NZD/CHF was down by 10 pips (-0.15%) to 0.6742

CAD

The Loonie was the second-strongest currency of the session and even gave the mighty euro a good fight.

There were no direct catalysts, but oil prices were well-supported as other commodities weakened, and it’s likely that Loonie pairs were taking directional cues from oil prices.

USD/CAD was down by 47 pips (-0.36%) to 1.3291, GBP/CAD was down by 47 pips (-0.27%) to 1.7395, NZD/CAD was down by 40 pips (-0.44%) to 0.8983

Watch Out For:

  • 12:30 pm GMT: U.S. final Q1 GDP (no change from 2.2% expected) and GDP price index (no change from 1.9% expected)
  • 12:30 pm GMT: U.S. initial jobless claims (220K expected vs. 218K previous)
  • 1:30 pm GMT: BOE MPC Member and Chief Economist Andy Haldane is scheduled to speak
  • 2:45 pm GMT: St. Louis Fed President James Bullard has a speech
  • 4:00 pm GMT: Atlanta Fed President Raphael Bostic will speak