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The pound and the euro battled for supremacy during the morning London session, with the pound coming out on top (for now at least).

The yen, meanwhile, continued its journey into negative territory as disappointment over the BOJ’s dovish forward guidance lingered.

  • German retail sales m/m; 1.2% vs. 1.1% expected vs. -2.1% previous
  • French HICP m/m: 2.6% vs. 2.4% expected, 2.3% previous
  • Spanish Q2 GDP q/q: 0.6% vs. 0.7% expected, 0.7% previous
  • German jobless rate: unchanged at 5.2% as expected
  • Italian HICP y/y: 1.9% vs. steady at 1.4% expected
  • Euro Zone HICP y/y: 2.1% vs. steady at 2.0% expected
  • Euro Zone core HICP y/y: 1.1% vs. 1.0% expected, 0.9% previous
  • Jobless rate in the Euro Zone: 8.3% as expected vs. 8.4% previous
  • Euro Zone’s GDP q/q: 0.3% vs. steady at 0.4% expected
  • Euro Zone’s GDp y/y: 2.1% vs. 2.2% expected, 2.5% previous

Major Events/Reports:

Kuroda speaks

The BOJ announced some tweaks to its forward guidance during the earlier Asian session.

And during the presser that followed, BOJ Shogun Haruhiko Kuroda was asked to clarify on these tweaks.

“This is the first time we will introduce forward guidance on interest rates. We’ve adopted this to ensure market trust in our policy as we will be maintaining our massive stimulus longer than initially expected. There was some speculation in the market that the BOJ will seek an early exit from stimulus, or raise rates soon. With this guidance, we can dispel such speculation.”

In other words, Kuroda is saying that the BOJ still wants to maintain its super loose monetary policy. And as a bonus, Kuroda also took a swing at speculators who were expecting the BOJ to announce a future tightening in monetary policy.

And according to Kuroda, an accommodative monetary policy is still needed because:

“[I]t is taking longer than expected for inflation to pick up, achievement of our target will be beyond our (three-year) forecast timeframe.”

On a slightly less dovish noted, Kuroda also noted that he does not “see the need for additional monetary easing now.”

Even so, Kuroda stressed that:

“There’s no change to our stance of easing policy further if necessary … For now, we think maintaining the condition for the output gap to narrow with our easy policy would be the best way to quicken achievement of our price target”

Euro Zone data dump

We got a bunch of economic reports for the Euro Zone and its member states earlier.

And focusing only on the Euro Zone as a whole, first up is the Euro Zone’s inflation report which revealed that the Euro Zone’s headline HICP rose by 2.1%% year-on-year, beating expectations that it would maintain the previous month’s annual pace of +2.0%.

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, ticked higher from +1.3% to +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.

And the good news doesn’t stop there since the reading for HICP less energy and unprocessed food, another of the ECB’s preferred measures for core inflation, also ticked higher from +1.2% to +1.3%, which is beating ECB’s forecast of +1.1% by the end of the year.

Moving on to the Euro Zone’s Q2 GDP report, that showed that GDP only grew by 0.3% quarter-on-quarter (steady at 0.4% expected) and 2.1% year-on-year (2.2% expected, 2.5% previous).

Despite missing the market’s expectations, the annual reading is still actually meeting the ECB’s expectations since the ECB forecasts that the Euro Zone’s GDP will grow by 2.1% this year.

Anyhow, last up is the Euro Zone’s June jobs report, which revealed that the jobless rate improved further from 8.4% to 8.3%, which is the best reading since December 2008. It also happens to be beating the ECB’s forecast that the jobless rate will come in at 8.4% by the end of the year.

Some risk-taking in Europe

The European equity indices had a mixed start but risk-taking was evidently the more prevalent sentiment in Europe since most of the major European equity indices were in positive territory by the end of the session.

And market analysts say that the mostly positive earnings reports helped to drive up demand for European shares, but lingering tech-related woes acted as a damper on risk sentiment.

  • The pan-European FTSEurofirst 300 was up by 0.22% to 1,533.91
  • Germany’s DAX was up by 0.04% to 12,803.48
  • The blue-chip Euro Stoxx 50 was up by 0.34% to 3,525.95

U.S. equity futures were also in the green, which is another sign that risk-taking was more dominant in Europe.

  • S&P 500 futures were up by 0.25% to 2,810.25
  • Nasdaq futures were up by 0.26% to 7,219.00

Major Market Mover(s):


The euro barely lost out to the pound but still managed to snatch second place, which ain’t too bad.

And the apparent catalyst for the euro’s rise are the mostly positive economic reports for the Euro Zone and its member states.

In fact, the euro even began to take ground from the mighty pound when economic reports for the Euro Zone were released because, as mentioned earlier, they were beating the ECB’s own forecasts.

The turnaround against the pound came too late, though, so the euro only finished the session in second place.

EUR/USD was up by 20 pips (+0.17%) to 1.1735, EUR/JPY was up by 61 pips (+0.47%) to 130.86, EUR/NZD was up by 39 pips (+0.23%) to 1.7210


The pound was able to eke out a win against the euro to claim the top spot during the morning London session.

There weren’t really any apparent catalysts for the pound’s broad-based strength, but some market analysts suggest possible preemptive buying due to speculation that the BOE will announce a rate hike on Thursday.

GBP/USD was up by 24 pips (+0.18%) to 1.3160, GBP/JPY was up by 79 pips (+0.55%) to 146.76, GBP/NZD was up by 57 pips (+0.30%) to 1.9269


The yen was the weakest currency of the morning London session and is also the worst-performing currency of the day (so far).

And yen’s slide is very likely due to lingering disappointment over the BOJ’s dovish forward guidance, especially since BOJ Shogun Kuroda only reinforced the BOJ’s rather dovish tone during the presser.

USD/JPY was up by 41 pips (+0.37%) to 111.51, AUD/JPY was up by 30 pips (+0.37%) to 82.82, CHF/JPY was up by 36 pips (+0.33%) to 112.89

Watch Out For:

  • 12:30 pm GMT: U.S. core PCE price index (0.1% expected, 0.2% previous)
  • 12:30 pm GMT: U.S. personal income (0.4% expected, same as previous) and personal spending (0.4% expected vs. 0.2% previous)
  • 12:30 pm GMT: Canada’s monthly GDP (0.3% expected vs. 0.1% previous)
  • 12:30 pm GMT: Canadian RMPI (2.7% expected vs. 3.8% previous) and IPPI (0.3% expected vs. 1.0% previous)
  • 1:00 pm GMT: S&P Case-Shiller composite HPI (6.4% expected vs. 6.6% previous)
  • 1:45 pm GMT: Chicagi PMI (61.8 expected vs. 64.1 previous)
  • 2:00 pm GMT: CB’s U.S. consumer confidence index (126.5 expected vs. 126.4 previous)