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The Greenback had another good run during today’s morning London session. The comdolls gave the Greenback a challenge, though, especially the Loonie.

The euro, meanwhile, was initially mixed but got swamped by sellers after the ECB’s meeting minutes were released. However, it worth noting that the euro still managed to win out against the safe-haven Swissy, which was likely reeling from the risk-on vibes during the session.

  • German final HICP m/m: unchanged at 0.1% as expected
  • French final HICO m/m: 0.0% vs. unchanged at 0.1% expected
  • Euro Zone industrial production m/m: 1.3% vs. 1.2% expected, -0.8% previous
  • U.S. CPI report coming up

Major Events/Reports:

Fed Mester support 2 more hikes

Earlier today, the Wall Street Journal (WSJ) released an article about a Wednesday interview with Cleveland Fed President Loretta Mester.

And according to Mester (as cited in the WSJ article):

“The economy can certainly handle two more increases this year.”

“We would end up getting behind if we don’t keep moving things up, so I’m very comfortable, if the economy stays on the path it’s going that we move rates up as appropriate this year.”

ECB’s meeting minutes

The ECB released the minutes of their most recent monetary policy huddle late into the session.

And after a quick read, most of the stuff in the minutes were already discussed during the June ECB statement and presser and were therefore not really new.

The minutes, for instance, reiterated the ECB’s forward guidance that the ECB’s QE program will be tapered and then ended by December 2018, while also stating that:

“[T]he Governing Council expected to keep the key ECB interest rates 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 remained broadly aligned with its current expectations of a sustained adjustment path”

The minutes didn’t elaborate further on that forward guidance.

However, the minutes did have a rather dovish vibe since ECB officials were stressing that:

“[I]t was important to highlight that, even after a termination of the net asset purchases under the APP, monetary policy would continue to be very accommodative.

Moreover, the minutes reinforced the idea that interest rates aren’t moving anytime soon since the minutes noted that (emphasis mine):

“Regarding the enhanced forward guidance on policy interest rates, it was felt that the open-ended character of the state-contingent component should be emphasised, with policy rates expected to remain at their present levels for as long as necessary to ensure that the evolution of inflation remained aligned with the Governing Council’s current expectations of a sustained adjustment in the path of inflation.”

Brexit White Paper

The British government released its White Paper on “The future relationship between the United Kingdom and the European Union” very late into the session.

It’s a rather long 104-page document and I haven’t fully read it yet, but here’s what the White Paper is all about:

  • It would take the UK out of the Single Market and the Customs Union.
  • It would give the UK the flexibility we need to strike new trade deals around the world, in particular breaking new ground for agreements in services.
  • It would maintain frictionless trade in goods between the UK and the EU through a new free trade area, responding to the needs of business.
  • It would deliver on both sides’ commitments to Northern Ireland and Ireland, avoiding a hard border without compromising the EU’s autonomy or UK sovereignty.

Commodities rebound

After yesterday’s severe beat-down, commodities were able to stage a broad-based recovery during the morning London session.

We can’t really attribute the commodities recovery to Greenback weakness since the Greenback was actually the top-performing currency of the session and is also a net winner for the day.

And for reference, the U.S. dollar index was up by 0.15% to 94.62 for the day by the end of the session.

However, some market analysts were pointing bargain buying as the reason for the recovery in some base metals.

Other market analysts, meanwhile, were attributing the rise in oil prices to a report from the International Energy Agency (IEA), which said the world’s oil supply “might be stretched to the limit” due to lower production.

Precious metals were in the green, but their gains were apparently capped by the risk-on vibes.

  • Gold was up by 0.03% to $1,244.30 per troy ounce
  • Silver was up by 0.65% to $15.895 per troy ounce

Base metals were also in positive territory.

  • Copper was up by 0.90% to $2.768 per pound
  • Nickel was up by 1.70% to $14,175.00 per dry metric ton

Oil benchmarks were also doing well.

  • U.S. WTI crude oil was up by 0.97% to $71.06 per barrel
  • Brent crude oil was up by 1.36% to $74.40 per barrel

Risk appetite returns

Risk appetite apparently got revived in Europe since the major European equity indices were broadly in positive territory during today’s morning London session.

Market analysts couldn’t point to a single catalysts, but some of the reasons cited for the risk-friendly vibes include risk sentiment spillover from the earlier Asian session, relief/bargain buying after yesterday’s selloff, and optimism because of the bounce in commodity prices.

  • The pan-European FTSEurofirst 300 was up by 0.80% to 1,504.57
  • Germany’s DAX was up by 0.65% to 12,496.33
  • The blue-chip Euro Stoxx 50 was up by 0.52% to 3,444.55

U.S. equity futures also got a lift.

  • S&P 500 futures were up by 0.53% to 2,788.75
  • Nasdaq futures were up by 0.51% to 7,290.75

Major Market Mover(s):


The Greenback was in the lead during the morning London. The Greenback got a boost when Mester’s interview was published, but the Greenback was already on its way up before that.

Anyhow, there were no direct catalysts for the Greenback’s strength before the interview was published, but some market analysts suggested that we may be seeing some preemptive positioning ahead of the U.S. CPI report.

GBP/USD was down by 16 pips (-0.12%) to 1.3202, AUD/USD was down by 12 pips (-0.16%) to 0.7376, NZD/USD was down by 11 pips (-0.16%) to 0.6757


The Loonie (and the other comdolls for that matter) gave the Greenback a good fight but ultimately lost out. Still, second place ain’t too bad. As to why the Loonie had a good run, that’s probably because the Loonie was taking directional cues from rising oil prices.

USD/CAD was up by 3 pips (+0.03%) to 1.3198, NZD/CAD was down by 18 pips (-0.21%) to 0.8911, AUD/CAD was down by 13 pips (-0.14%) to 0.9735


The euro initially had a mixed performance during the session. That changed when sellers began to rush the euro after the ECB’s meeting minutes were released, probably because the minutes reinforced the idea that the ECB ain’t in the mood to hike rates.

EUR/USD was down by 32 pips (-0.27%) to 1.1653, EUR/GBP was down by 16 pips (-0.19%) to 0.8825, EUR/NZD was down by 24 pips (-0.14%) to 1.7238


The euro was weak, but the Swissy was weaker and is therefore the worst-performing currency of the session, likely because of the risk-friendly vibes in Europe.

USD/CHF was up by 36 pips (+0.36%) to 0.9986, EUR/CHF was up by 11 pips (+0.10%) to 1.1638, CAD/CHF was up by 16 pips (+0.24%) to 0.6750

Watch Out For:

  • 12:30 pm GMT: Headline (0.2% expected, same as previous) and core (0.2% expected, same as previous) readings for U.S. CPI; read Forex Gump’s Event Preview
  • 12:30 pm GMT: U.S. initial jobless claims (225K expected vs. 231K previous)
  • 12:30 pm GMT: Canada’s NHPI (0.1% expected vs. 0.0% previous)
  • 6:00 pm GMT: U.S. Federal budget balance (-$80.0B expected vs. -$146.8B previous)