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The pound was on the receiving end of a rather severe pounding, thanks to the U.K.’s disappointing CPI report.

And while the Greenback was still a net winner during the session, the safe-havens yen and Swissy were able to fight back, even though risk-taking was apparently the dominant sentiment in Europe.

  • U.K. CPI m/m: 0.0% vs. 0.2% expected, 0.4% previous
  • U.K. CPI y/y: 2.4% vs. 2.6% expected, 2.4% previous
  • Core U.K. CPI y/y: 1.9% vs. steady at 2.1% expected
  • HPI in the U.K. y/y: 3.0% vs. 3.8% expected, 3.5% previous
  • U.K. PPI input m/m: 0.2% vs. 0.3% expected, 3.3% previous
  • U.K. PPI output m/m: 0.1% vs. 0.3% expected, 0.5% previous
  • Euro Zone final HICP y/y: unchanged at 2.0% as expected
  • Euro Zone final core HICP y/y: 0.9% vs. no change from 1.0% expected
  • Fed Chair Powell will testify later

Major Events/Reports:

U.K. CPI report disappoints

The U.K.’s June CPI report was released earlier during the session. And according to the report, headline CPI was flat month-on-month, which is rather sad because the market was expected a 0.2% rise.

Year-on-year, CPI rose by 2.4%, which is the same rate of annual increase as in May but is sadly weaker than the expected 2.6% increase.

And that’s not the worst of it since the 2.4% reading is below the BOE’s own forecast that CPI will increase by 2.5% in June, which likely dented expectations for a BOE rate hike.

A closer look at the details of CPI report shows that 6 of the 12 CPI components printed weaker annual readings. As for the other CPI components, three were able to maintain the annual pace, while the remaining three printed stronger readings.

However, of the three that printed stronger readings, higher costs for housing, water, electricity (+2.1% vs. +1.5% previous), as well as higher transportation costs (+5.5% vs. +4.7% previous), were the main drivers.

And those two CPI components picked up the pace largely because the cost of liquid fuels surged by 38.3% in June. Higher fuel costs are not very sustainable, though. Also, the overall picture is that underlying inflation is not picking up too strongly.

Risk appetite in Europe

The major European equity indices got a broad-based bullish boost, which is a sign that risk appetite is back in Europe.

And according to market analysts, the risk-friendly vibes in Europe were due to risk sentiment spillover, since they’re still pointing to Fed Chair Powell’s optimistic speech from yesterday.

  • The pan-European FTSEurofirst 300 was down by 0.50% to 1,514.40
  • Germany’s DAX was down by 0.70% to 12,749.68
  • The blue-chip Euro Stoxx 50 was down by 0.66% to 3,482.15

Global bond yields fall

Despite the risk-friendly vibes in the European equities market, bond were in strong demand, sending global bond yields lower.

And some market analysts say that bond were in demand because of lingering global growth concerns, likely because of the ongoing trade spat between the U.S. and China.

And it didn’t help that China’s foreign ministry warned earlier that the trade war started by the U.S. is the biggest “confidence killer” for the global economy.

  • German 10-year bond yield already up by 5.75% to 0.328%
  • French 10-year bond yield already up by 2.27% to 0.615%
  • U.K. 10-year bond yield down by 4.44% to 1.205%
  • U.S. 10-year bond yield was stil up by 0.46% to 2.849%
  • Canadian 10-year bond yield down by 1.22% to 2.097%

Major Market Mover(s):


The pound got utterly crushed during the morning London session, thanks to a torrent of sellers after the U.K.’s latest CPI report failed to meet both the market’s and the BOE’s expectations.

GBP/USD was down by 65 pips (-0.50%) to 1.3025, GBP/CHF was down by 94 pips (-0.72%) to 1.3031, GBP/JPY was down by 88 pips (-0.60%) to 147.10


The Swissy and the yen somehow managed to win out against the mighty Greenback during the session, even though risk-taking was apparently the dominant sentiment in Europe.

The yen’s strength somehow made sense since it’s likely that yen pairs were taking directional cues from falling bond yields.

As for the Swissy, it’s possible that the Swissy may have been boosted by trade-related jitters since the Swissy began to take ground from the Greenback after China’s foreign ministry warned earlier that the trade war started by the U.S. is the biggest “confidence killer” for the global economy.

USD/CHF was down by 21 pips (-0.21%) to 1.0005, CAD/CHF was down by 24 pips (-0.32%) to 0.7550, NZD/CHF was down by 10 pips (-0.15%) to 0.6761

USD/JPY was down by 10 pips (-0.09%) to 112.96, CAD/JPY was down by 19 pips (-0.22%) to 85.23, NZD/JPY was down by 7 pips (-0.09%) to 76.35


The euro was the second weakest currency of the session. And market analysts are still blaming that on the Greenback’s overall strength.

EUR/USD was down by 25 pips (-0.22%) to 1.1608, EUR/JPY was down by 39 pips (-0.30%) to 131.12, EUR/CHF was down by 47 pips (-0.40%) to 1.1616

Watch Out For:

  • 12:30 pm GMT: U.S. housing starts (1,320K expected vs. 1,350K previous)
  • 12:30 pm GMT: U.S. building permits (1,330K expected vs. 1,301K previous)
  • 1:30 pm GMT: CB’s leading U.K. index (-0.2% previous)
  • 2:00 pm GMT: Fed Chair Powell will testify before the House Financial Services Committee
  • 2:30 pm GMT: U.S. crude oil inventories (-3.4M expected vs. -12.6M previous)