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Europe was hit by another wave of risk aversion, which gave the safe-haven Swissy another bullish boost. The Swissy even managed to score a win against the Greenback, which was in recovery mode ahead of Fed Chair Powell’s speech.

The risk-off vibes, meanwhile, gave the higher-yielding currencies a rough time, with the Aussie getting the worst of it.

The pound is also worth mentioning since it was the only currency that had top-tier catalysts but it was mixed for most of the session, before getting swamped by late sellers and closing out the session in second-to-last place.

  • U.K. jobless rate: steady at 4.2% as expected
  • U.K. average earning (3m y/y): 2.5% as expected vs. 2.6% previous
  • Claimant count change in the U.K.: 7.8K vs. 2.3K expected, -3.0K previous
  • Fed Chair Powell will testify later
  • Parliamentary debate on Brexit trade bill later

Major Events/Reports:

U.K. jobs report

The Office for National Statistics (ONS) released the U.K.’s latest jobs report earlier.

And as expected, the jobless rate in the three months to May was unchanged at 4.2%, which is a 42-year low.

However, the number of people who claimed unemployment benefits increased by 7.8K in June, much more than the expected 2.3K increase.

As for wage growth, average weekly earnings only grew by 2.5% year-on-year in May, which is a tick slower compared to the 2.6% increase in April.

But on a happier note, the weaker increase in wage growth was due to the 0.8% decrease in bonus pay (+1.0% previous). Also the three-month average for average weekly earnings (including bonus pay) comes in at 2.5%, which is within expectations.

And if bonuses are stripped and only regular pay is considered, then average weekly earnings rose by 2.6% year-on-year, matching the 2.6% increase in April.

Furthermore, if we take inflation into account to get real wage growth, then average weekly earnings (including bonus pay) increased by 0.1% year-on-year. The reading is actually weaker compared to the 0.3% rise in April, but still marks the sixth consecutive month of increase.

Moreover, if we exclude bonuses, then average weekly earnings actually accelerated from +0.2% to +0.3%.

BOE Carney speaks

BOE Guv’nah Mark Carney, along with BOE Deputy Guv’nah Jon Cunliffe, testified before the Treasury Select Committee earlier today.

And Carney warned that:

“[I]n the event of a no-deal [Brexit] scenario … there would be big economic consequences. We might have a lot of idle bankers as there is not a lot of demand for their services.”

“[W]e are concerned that the EU has not yet indicated its solution. The private sector cannot solve these issues.”

Carney also said that a no-deal scenario would impact monetary policy but he won’t say how the BOE will view such a scenario.

To quote directly from Carney:

“It would be a material event. I wouldn’t prejudge in which direction, though.”

Labour to back customs amendment

According to a report from The Guardian, The U.K.’s Labour Party supposedly confirmed that the party will support the Tory rebels’ customs union amendment, which will keep the U.K. in a customs union after Brexit and also happend to be a direct challenge to Theresa May’s government.

The report also cited a “senior Labour source” as saying that:

“We saw yesterday there is no majority for May’s Chequers’ agreement. But there is a majority for a customs union. Today parliament has the chance to change the course of the Brexit negotiations, protect jobs and the economy. Fingers crossed the Lib Dems turn up.”

Another risk-off day in Europe

The major European equity indices had a repeat of yesterday’s price action in that they initially tried to make their way up only to get hit by sellers and eventually sink into negative territory, which means that risk aversion is apparently here to stay.

Anyhow, market analysts attributed the earlier risk-on vibes to recovering oil prices.

As for the later risk-off vibes, well, there’s no clear catalysts, but we can probably blame that on sliding oil prices during the session since the energy sector was one of the biggest losers.

And as mentioned earlier, market analysts were attributing the earlier risk-on vibes to recovering oil prices.

  • The pan-European FTSEurofirst 300 was down by 0.24% to 1,499.46
  • Germany’s DAX was down by 0.17% to 12,539.91
  • The blue-chip Euro Stoxx 50 was down by 0.47% to 3,436.25

U.S. equity futures were also dragged into negative territory.

  • S&P 500 futures were down by 0.19% to 2,791.25
  • Nasdaq futures were down by 0.28% to 7,304.50

Major Market Mover(s):


Europe was plagued by another bout of risk aversion, which made for a great environment for the safe-haven Swissy.

USD/CHF was down by 7 pips (-0.08%) to 0.9946, NZD/CHF was down by 22 pips (-0.32%) to 0.6780, AUD/CHF was down by 28 pips (-0.40%) to 0.7369


The risk-off vibes may have been great for the safe-haven Swissy, but they weren’t all that great for the higher-yielding currencies, with the Aussie bearing the brunt of it.

AUD/NZD was down by 18 pips (-0.16%) to 1.0866, AUD/CAD was down by 10 pips (-0.10%) to 0.9738, AUD/JPY was down by 13 pips (-0.15%) to 83.36


After dipping earlier, the Greenback staged a broad-based recovery during the morning London session and was even able to claim the second top spot after the Swissy.

There were no apparent catalyst for the Greenback’s recovery, but it’s possible that we’re seeing some short-covering ahead of Powell’s testimony.

EUR/USD was down by 28 pips (-0.24%) to 1.1705, NZD/USD was down by 14 pips (-0.20%) to 0.6812, AUD/USD was down by 27 pips (-0.37%) to 0.7403


The pound tried to jump higher when the U.K.’s latest jobs report was released, likely because the market was pleased that wage growth is showing some promising signs.

Selling pressure was ever-present and capped the pound’s gains, though, likely because of Carney’s warnings about Brexit.

And apparently, Brexit-related jitters finally won out since the pound was swamped by late sellers after word got around that Labour will supposedly back the Tory rebels’ customs union amendment.

GBP/USD was down by 46 pips (-0.32%) to 1.3195, GBP/CHF was down by 47 pips (-0.36%) to 1.3137, GBP/NZD was down by 46 pips (-0.24%) to 1.9374

Watch Out For:

  • 12:30 pm GMT: Canadian manufacturing sales (0.4% expected vs. -1.3% previous)
  • 1:15 pm GMT: U.S. industrial production (0.5% expected vs. 0.1% previous)
  • 1:15 pm GMT: U.S. capacity utilization (78.3% expected, 77.9% previous)
  • 2:00 pm GMT: Fed Chair Powell will testify before the Senate Banking Committee
  • 2:00 pm GMT: NAHB U.S. housing market index (68 expected, same as previous)
  • Dairy auction currently underway (-5.0% previous); auction usually ends at around 2:00 pm GMT