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The European currencies (GBP, EUR, CHF) were the top-performing currencies of the session, with the pound in lead, thanks to a slew of positive economic reports that helped to raise expectations for an August BOE rate hike.

And interestingly enough, the Swissy managed to outpace the euro, apparently because of signs that risk aversion is returning and a comment from Swiss Finance Minister Maurer.

All the comdolls (CAD, AUD, NZD), meanwhile, were on the backfoot likely because of the returning risk-off vibes after rumors made the rounds that Trump wants to get the U.S. out of the WTO.

  • German retail sales m/m: -2.1% vs. -0.5% expected, 1.6% previous
  • German import prices m/m: 1.6% vs. 1.0% expected, 0.6% previous
  • French preliminary HICP y/y: 2.1% vs. 2.0% previous
  • KOF Swiss economic barometer: 101.7 vs. 100.3 expected 100.0 previous
  • German unemployment change: -15K vs. -8K expected, -12K previous
  • U.K. current account: -£17.7B vs. -£18.0B expected, -£19.5B previous
  • U.K. final Q1 GDP q/q: revised higher to 0.2% vs. no change from 0.1% expected
  • Mortgage approvals in the U.K.: 65K vs. 62K expected, 63K previous
  • U.K. index of services 3m/3m: 0.2% vs. 0.0% expected, 0.3% previous
  • Euro Zone HICP y/y: 2.0% as expected vs. 1.9% previous
  • Euro Zone core HICP y/y: 1.0% as expected vs. 1.1% previous

Major Events/Reports:

Maurer speaks

Ulrich “Ueli” Maurer, the Swiss Finance Minister, got some press time earlier after his meeting with Austrian Finance Minister Hartwig Löger.

And according to Maurer:

“At the moment, the short-term relationship between the Swiss franc and the euro is no problem.”

That assessment of the Swissy’s exchange rate goes against SNB Overlord Thomas Jordan’s mantra that the Swissy “remains highly valued” and is very likely why the Swissy was able to power higher despite the strong appetite for risk during the morning London session.

Net positive U.K. data

The U.K. released a slew of economic reports during the morning London session that painted a generally positive picture.

First up is the final estimate for Q1 U.K. GDP growth, which was revised higher from +0.1% quarter-on-quarter to +0.2% quarter-on-quarter.

This likely helped to revive rate hike expectations since the reading is better than the BOE’s forecast of +0.1%, as reported in the BOE’s May Inflation Report.

And a quick look at the details of the GDP report shows that the upgraded reading was due to construction output being 1.9% stronger than originally estimated. On an expenditure basise, the upgraded reading was due to exports growing 0.5% faster than originally estimated and gross capital formation increased by 0.7% more than originally recorded.

Moving on, the U.K.’s balance of payment report revealed that the U.K.’s account deficit narrowed from £19.5 billion to £17.7 billion in Q1, which is not that surprising. After all, I did note earlier that export growth was revised higher. The report did note that the U.K.’s primary income deficit narrowed as well and contributed to the smaller account deficit.

Next, the U.K.’s Index of Services report showed that services output rose by 0.3% month-on-month in April, which is the strongest reading since November 2017.

And this translates to three-month average of 0.2%, which is lower compared to the previous three-month average of 0.3% but is much better compared to the consensus that the three-month average would come be a flat 0.0%.

Anyhow, that’s not that last positive economic report for the U.K. since the BOE’s Money and Credit report for May also showed that the number of mortgage approvals increased by 65K in May, more than the 62K consensus and the biggest number since January.

That’s not the only good news, though, since the report also noted that “The increase in borrowing by businesses in May was the highest since July 2017. Within this bond issuance was particularly strong, driven by mergers and acquisitions.”

Euro Zone HICP

The flash estimate for the Euro Zone’s June HICP came in at 2.0% year-on-year, which is within expectations but a tick faster compared to the +1.9% increase recorded in May.

More importantly, the reading is well above the ECB’s forecast that headline HICP will increase by 1.7% year-on-year in 2018, as reported in the June Eurosystem/ECB Staff Macroeconomic Projections.

Moreover, HICP less energy, one of the ECB’s preferred measures for core inflation, maintained the previous month pace of +1.4%. And like the headline reading, the +1.4% reading is also beating the ECB’s forecast that HICP less energy will print a 1.3% annual increase by the end of the year.

The only disappointing bit was the reading for HICP less energy and unprocessed food, another of the ECB’s preferred measures for core inflation, since that weakened from 1.1% to 1.0%. The reading is also below the ECB’s forecast of +1.1% by the end of the year.

Trump supposedly wants U.S. out of WTO

According to “people involved in the talks” that were cited in a report from Axios, U.S. President Trump supposedly wants the U.S. to withdraw from the WTO.

And according to these unnamed sources, Trump is very insistent and persistent:

“He’s [threatened to withdraw] 100 times. It would totally [screw] us as a country.”

The unnamed sources also quoted Trump as supposedly saying the following:

“We always get [☠❤😡❗] by them [the WTO]. I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States.”

Risk-taking stalls in Europe

The major European equity indices opened broadly higher and then climbed to fresh intraday highs.

However, the risk-taking later stalled and many of the major European equity indices were forced off their intraday highs, which is a sign that risk aversion is returning and/or risk-taking has stalled.

Anyhow, the risk-on vibes from earlier were attributed by market analysts to risk sentiment spillover from the Asian session since market analysts were still pointing China’s announcement that it will allow more foreign invesments, as well as earlier news that E.U. members agreed to an immigration deal.

As for the later signs of risk aversion, that was apparently due to trade-related rumors, namely the one I mentioned earlier about Trump’s supposed plans to withdraw the U.S. from the WTO.

  • The pan-European FTSEurofirst 300 was up by 0.99% to 1,490.05 but off the day’s high at 1,494.47
  • Germany’s DAX was up by 1.25% to 12,329.17 but off the day’s high at 12,383.90
  • The blue-chip Euro Stoxx 50 was up by 1.39% to 3,408.35 but off the day’s high at 3,421.35

Major Market Mover(s):


The pound dominated its peers during the morning London session, thanks to a bunch of positive economic reports.

The U.K.’s upgraded GDP reading and better-than-expected services index, in particular, supposedly helped to raise expectations for an August BOE rate hike, market analysts say.

GBP/USD was up by 43 pips (+0.33%) to 1.3150, GBP/AUD was up by 71 pips (+0.40%) to 1.7810, GBP/NZD was up by 90 pips (+0.47%) to 1.9455


The safe-haven Swissy was the second strongest currency of the morning London session.

That’s right.  The Swissy managed to win out against the euro, even though the euro’s rally was extended on most pairs because of the Euro Zone’s inflation report.

As to why the Swissy strengthened, that appears to be reaction to Swiss Finance Minister Maurer’s remark that the Swissy’s exchange rate against the euro is not a problem, which goes against the SNB’s mantra that the Swissy “remains highly valued.”

It also very likely helped that risk-taking stalled after that rumor about Trump began to make the rounds.

USD/CHF was down by 18 pips (-0.18%) to 0.9927, AUD/CHF was down by 20 pips (-0.27%) to 0.7329, NZD/CHF was down by 21 pips (-0.31%) to 0.6709


All the comdolls (CAD, NZD, AUD) were feeling the heat during the morning London session, thanks to selling pressure after the rumor about Trump’s supposed plans to withdraw the U.S. from the WTO got around.

And among the comdolls, it was the Loonie that got the worst of it. There’s no apparent reason why, but it possible that Loonie bulls are just taking some profits off the table ahead of Canadian economic data for later. After all, the Loonie did have a good run this week.

USD/CAD was up by 21 pips (+0.16%) to 1.3248, EUR/CAD was up by 46 pips (+0.30%) to 1.5434, GBP/CAD was up by 84 pips (+0.49%) to 1.7420

Watch Out For:

  • 12:30 pm GMT: Canada’s monthly GDP (0.0% expected vs. 0.3% previous)
  • 12:30 pm GMT: U.S. personal income (0.4% expected vs. 0.3% previous) and U.S. personal spending (0.4% expected vs. 0.6% previous) and
  • 12:30 pm GMT: U.S. core PCE price index (0.2% expected, same as previous)
  • 12:30 pm GMT: Canada’s RMPI (2.7% expected, 0.7% previous) and IPPI (0.9% expected, 0.5% previous)
  • 1:45 pm GMT: Chicago PMI (60.0 expected vs. 62.7 previous)
  • 2:00 pm GMT: University of Michigan’s revised consumer sentiment (downgrade from 99.3 to 99.0 expected)
  • 2:30 pm GMT: BOC’s business outlook survey results will be released