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Directional movement was a bit lacking during the morning London session, with many pairs milling about in tight ranges.

However, risk sentiment did switch back to risk-off during the session. And that gave the safe-havens yen and Swissy a boost. Demand for the yen was stronger, though, likely because the yen got an extra boost from falling bond yields.

Aside from the yen and the Swissy, the pound was also busting the moves since it was rushed by sellers at the start of the session. There was little follow-through selling, though, and the pound’s price action became mixed after that. However, the pound wasn’t able to recover from the early selling, so it was the worst-performing currency of the session.

  • The Euro Zone’s current account: €23.5B vs. €23.2B expected, €24.4B previous
  • Euro Zone final HICP y/y: unchanged at 2.1% as expected
  • Euro Zone final core HICP y/y: unchanged at 1.1% as expected
  • Canada’s CPI report coming up

Major Events/Reports:

Risk-off ending in Europe

The risk-friendly vibes from the earlier Asian session failed to carry over into the morning London session since most of the major European equity indices are closing out the week on a downbeat note.

And market analysts say that risk aversion dominated in Europe because optimism brought about by planned US-China trade talks were overpowered by the Turkish lira’s retreat, which renewed contagion fears and dented demand for European banks, souring overall risk sentiment in the process.

  • The pan-European FTSEurofirst 300 was down by 0.33% to 1,487.09
  • Germany’s DAX was down by 0.62% to 12,160.73
  • The blue-chip Euro Stoxx 50 was down by 0.17% to 3,375.45

The risk-off vibes in Europe also dragged U.S. equity futures into negative territory. And that implies that the risk-off vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.14% to 2,840.75
  • Nasdaq futures were down by 0.16% to 7,377.00

Global bond yields fall

Another sign that risk aversion was the name of the game in Europe was the demand for bonds, which caused global bonds yields to fall.

  • German 10-year bond yield down by 4.44% to 0.301%
  • French 10-year bond yield down by 1.66% to 0.663%
  • U.K. 10-year bond yield down by 2.02% to 1.215%
  • U.S. 10-year bond yield down by 0.62% to 2.853%
  • Canadian 10-year bond yield down by 0.89% to 2.236%

Major Market Mover(s):

JPY

The safe-haven yen apparently got a double boost from falling bond yields and the risk-off vibes since the yen is not only the top-performing currency of the morning London session, but of the day (so far) as well.

USD/JPY was down by 28 pips (-0.25%) to 110.48, EUR/JPY was down by 30 pips (-0.24%) to 125.81, CHF/JPY was down by 21 pips (-0.19%) to 110.95

GBP

The pound was kicked broadly lower at the start of the morning London session and never quite recovered from the early selling, so the pound found itself at the very bottom of the forex heap.

As to what triggered the early selling, that’s not really very clear.

The only news around that time was a report claiming that former Foreign Secretary Boris Johnson was being urged to lead a pro-Brexit bus tour, but that’s not really market moving. And besides, the report also cited an unnamed source as saying that Johnson has no plans to go on a bus tour.

GBP/USD was down by 19 pips (-0.15%) to 1.2715, GBP/JPY was down by 58 pips (-0.41%) to 140.46, GBP/NZD was down by 44 pips (-0.23%) to 1.9261

Watch Out For:

  • 12:30 pm GMT: Canada’s CPI (0.1% expected, same as previous); read Forex Gump’s Event Preview
  • 2:00 pm GMT: University of Michigan’s preliminary consumer sentiment (98.1 expected vs. 97.9 previous)
  • 2:00 pm GMT: CB’s leading U.S. index (0.4% expected vs. 0.5% previous)