Price action was rather choppy during the morning London session. With that said, some themes were playing out, namely soft demand for the Swissy and the pound, as well as further weakness on the part of the Greenback.
- German PPI m/m: 0.3% as expected vs. 0.5% previous
- Euro Zone current account: €22.4B vs. €27.2B expected, €29.6B previous
- U.K. public sector net borrowing: £4.5B vs. £3.6B expected, £3.9B previous
- Canada’s CPI and retail sales reports coming up
“I’m not thrilled [with hiking rates].”
“Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.”
“I don’t like all of this work that we’re putting into the economy and then I see rates going up.”
And those comments sent the Greenback lower.
Well, Trump apparently had more to say. As for specifics, Trump said that he’s ready to escalate the trade war with China when he said that:
“We’re down a tremendous amount … I’m ready to go to 500.”
That “500” figure refers to $505.5 billion worth of imports from China. In contrast, the U.S. only exported $129.9 billion worth of goods to China.
And what Trump is saying here is that he is ready and willing to slap tariffs on all Chinese imports. And for reference, the U.S. only has tariffs on $34 billion worth of Chinese goods (for now).
Italy’s Borghi speaks
Claudio Borghi, a know euroskeptic and the Head of the budget committee, was interviewed by Corriere Della Sera and when Borghi was asked when he became a euroskeptic, Borghi answered as follows:
“In the summer of 2011. I was in Liguria, at the sea. While the images of the Greek crisis were running on TV, I thought: ‘We are trapped. We have to get out of the Euro zone.'”
And as a follow-up question, Borghi was asked if he thinks that Italy will be leaving the euro sooner or later, Borghi simply said:
“I’m very convinced of it.”
Risk-off ending in Europe
The major European equity indices were on the back foot again today, so Europe is apparently closing out the week on a downbeat note.
Market analysts blamed poor earnings results and trade-related jitters for today’s bout of risk aversion.
However, the major European equity indices also found additional selling pressure after Trump’s full CNBC interview was released, since that likely increased trade-related jitters.
- The pan-European FTSEurofirst 300 was down by 0.22% to 1,509.49
- Germany’s DAX was down by 0.38% to 12,640.61
- The blue-chip Euro Stoxx 50 was down by 0.30% to 3,460.15
Major Market Mover(s):
The Greenback was already showing some weakness earlier on. And after recovering a bit at the start of the session, the Greenaback resumed its slide after CNBC released its full interview with U.S. President Donald Trump.
USD/JPY was down by 9 pips (-0.08%) to 112.26, USD/CHF was down by 20 pips (-0.20%) to 0.9970, USD/JPY was down by 11 pips (-0.10%) to 112.24
For what it’s worth, the Swissy was nudged higher across the board and was the top-performing currency of the session, likely because of the risk-off vibes in Europe.
EUR/CHF was down by 12 pips (-0.11%) to 1.1629, AUD/CHF was down by 7 pips (-0.09%) to 0.7353, NZD/CHF was down by 7 pips (-0.10%) to 0.6743
The pound was the second strongest currency of the morning London session, even though there were no positive catalysts.
The pound is the biggest loser of the week, though, so it’s possible that we’re just seeing some short-covering by GBP bears to avoid weekend risk.
GBP/USD was up by 24 pips (+0.19%) to 1.3044, GBP/AUD was up by 13 pips (+0.08%) to 1.7684, GBP/NZD was up by 14 pips (+0.07%) to 1.9284
Watch Out For:
- 12:30 pm GMT: Headline (+0.9% expected vs. -1.2% previous) and core (+0.5% expected vs. -0.1% previous) readings for Canada’s retail sales
- 12:30 pm GMT: Canada’s CPI (+0.1% expected, same as previous); read Forex Gump’s Event Preview