The Swissy was still in demand because of the risk-off vibes during the morning London session.
However, the safe-haven Swissy only finished the session in second place since it was outpaced, not by the yen or the Greenback, but by the higher-yielding Kiwi.
Net positive economic data, meanwhile, were not able to prevent the pound from closing the session broadly lower.
The euro is also worth mentioning since it steadied a bit during the session after getting whupped hard earlier when a Financial Times report claimed that ECB members were getting worried about the exposure of E.U. lenders to the ongoing troubles in Turkey, which may lead to a contagion effect.
- French industrial production m/m: 0.6% vs. 0.5% expected, -0.2% previous
- French private payrolls q/q: 0.2% vs. 0.3% expected, 0.2% previous
- Italian trade balance: €5.07B vs. €3.41B expected, 3.37B previous
- U.K. GDP m/m: 0.1% vs. 0.2% expected, 0.3% previous
- U.K. GDP q/q: 0.4% as expected vs. 0.2% previous
- Construction output in the U.K. m/m: 1.4% vs. -0.2% expected, 2.9% previous
- U.K. Industrial production m/m: 0.4% as expected, -0.2% previous
- U.K. Manufacturing production m/m: 0.4% vs. 0.3% expected, 0.6% previous
- U.K. goods trade balance: -£11.4B vs. -£12.0B expected, -£12.5B previous
- Canada’s jobs report coming up
- U.S. CPI report also on the docket
Net positive U.K. data
The Office for National Statistics (ONS) released a bunch of economic of report for the U.K. during the session.
First up is the U.K.’s Index of Production report, which showed that total industrial production in the U.K. rose by 0.4% month-on-month in June, which is within expectations and puts an end to two consecutive month of declines.
The recovery in total industrial production was due mainly to the 0.4% month-on-month increase in manufacturing output, which exceeded expectations for a 0.3% increase, as well as the 1.6% increase in water and waste management services output.
Moving on, the next economic report is the U.K.’s June construction output report. And that revealed that construction output surged by 1.4% month-on-month in June, which is slower compared to the previous +2.9% increase but is significantly better-than-expected since the consensus was for a 0.2% decline.
Next up is the U.K.’s June trade report. And that showed that the U.K.’s trade deficit narrowed further from £3.14 billion to £1.86 billion, thanks to the 2.7% increase in exports (+2.2% previous) and a weaker increase in imports (+0.2% vs. +1.2% previous). The increase in exports was also driven mainly by the 4.3% increase in export of goods, which caused the goods trade deficit to narrow from £12.5 billion to £11.4 billion, beating expectations that it would only narrow to £12.0 billion.
And the final economic report that was released during the session was the U.K.’s GDP report.
And unfortunately, that revealed that the U.K’s GDP only grew by 0.1% month-on-month in June, which is below expectations for a 0.2% increase. Despite the miss, the GDP reading for all of Q2 still came in at +0.4% quarter-on-quarter, which is within expectations and is a faster reading compared to Q1’s +0.2%.
More risk aversion in Europe
Europe is apparently ending the week on a gloomy note since the major European equity indices were broadly in the red yet again during the morning London session.
And according to market analysts today’s bout of risk aversion was due to growing concerns over a possible contagion effect from the current troubles in Turkey.
- The pan-European FTSEurofirst 300 was down by 0.96% to 1,512.54
- Germany’s DAX was down by 1.67% to 12,464.69
- The blue-chip Euro Stoxx 50 was down by 1.49% to 3,440.25
U.S. equity futures were also weighed down.
- S&P 500 futures were down by 0.45% to 2,841.00
- Nasdaq futures were down by 0.49% to 7,438.50
Major Market Mover(s):
The pound was the worst-performing currency of the session. It encountered sellers right from the start, but tried to recover when the U.K. released a slew of net positive economic reports.
However, there were just not enough buyers, so the pound ended up as the worst-performing currency of the session.
And according to market analysts, the pound was on the back foot because of a broadly stronger Greenback and lingering Brexit-related concerns.
GBP/USD was down by 21 pips (-0.17%) to 1.2769, GBP/CHF was down by 28 pips (-0.22%) to 1.2701, GBP/NZD was down by 48 pips (-0.25%) to 1.9344
The Kiwi was the best-performing currency of the session, which is rather wonky since risk aversion was the name of the game in Europe.
The Kiwi is the biggest loser of the week, though. It’s therefore probable that market players who profited handsomely from the Kiwi’s RBNZ-induced selloff were just covering their shorts in order to protect their hard-won profits.
NZD/USD was up by 6 pips (+0.09%) to 0.6601, NZD/CAD was up by 17 pips (+0.20%) to 0.8643, NZD/CHF was up by 7 pips (+0.11%) to 0.6567
The safe-haven Swissy initially showed weakness against the yen and the Greenback, which were also likely buoyed by safe-haven flows. However, the Swissy was able to turn the tables during the session and was able to overpower those two.
The Swissy only finished in second place, though, since buying pressure was stronger on the Kiwi (during this session at least).
USD/CHF was down by 13 pips (-0.14%) to 0.9939, CAD/CHF was down by 16 pips (-0.22%) to 0.7594, EUR/CHF was down by 22 pips (-0.20%) to 1.1391
Watch Out For:
- 12:30 pm GMT: Canada’s jobless rate (5.9% expected vs. 6.0% previous) and net employment change (+17.0K expected vs. 31.8K previous); read Forex Gump’s Event Preview
- 12:30 pm GMT: Headline (0.2% expected vs. 0.1% previous) and core (0.2% expected, same as previous) readings for U.S. CPI
- 6:00 pm GMT: U.S. Federal budget balance (-$76.5B expected vs. -$74.9B previous)