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The Aussie and the euro took a beating during the earlier Asian session and continued to do so during the morning London session. And oddly enough, the Loonie also joined the loser’s club, despite rising oil prices.

The pound, meanwhile, caught a bid when the morning London session rolled around and then steadily steamrolled its peers to claim the top spot.

  • German GfK consumer climate: 10.5 vs. 10.6 expected, same as previous
  • French consumer spending m/m: 0.1% vs. 0.3% expected, 0.1% previous
  • French preliminary GDP q/q: 0.2% as expected, same as previous
  • Credit Suisse economic expectations: -14.3 vs. -4.0 previous
  • U.S. and Canada expected to resume trade talks later
  • Brexit Secretary Dominic Raab will speak before Parliament later

Major Events/Reports:

Westpac hikes variable mortgage rates

The Westpac Banking Corporation announced during the earlier Asian session that it will hike rates on variable home loans by 0.14% to 5.38%, effective September 19.

Westpac CEO Brian Hartzer explained the decision by saying that:

“That [costs] started going up in February, we were hoping that that would go back down, it hasn’t and, after six months at a sustained level, we’ve reluctantly concluded that it’s going to stay at that more elevated rate, and therefore we came to the conclusion that that needed to be reflected in the price of our loans.”

Hiking of variable mortgage rates is not new since some of the smaller Australian banks have already been doing it.

However, Westpace’s move is big news since Westpac is the first of the so-called “big four” banks to raise rates, with the three other big banks being the Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), and National Australia Bank (NAB).

The move also likely raised expectations that the RBA will be forced to keep rates steady even longer in order not to increase the pressure on consumers and avoid a potential housing market problem.

Italy to ask ECB for more QE (rumor)

Italian newspaper La Stampa cited unnamed government sources as saying the following:

“If the ECB covers you, markets can’t speculate because they don’t make money.”

“And in this way the rating agencies can’t downgrade your debt.”

In other words, the Italian government allegedly wants the ECB to buy up Italian bonds, thereby lowering bonds yields and making Italian bonds unattractive for speculators, as well as protecting Italian bonds from ratings downgrades.

Risk-taking prevails but faltering (Part II)

The major European equity indices had a repeat of yesterday’s performance in that they had a promoising start but eventually began to turn lower as selling pressure began to win out.

Market analysts were quick to attribute the earlier risk-on vibes to trade-related optimism.

As to why risk appetite appeared to fade later on, market analysts say that was due uncertainty surrounding a potential trade agreement between the U.S. and Canada, as well as profit-taking ahead of the U.S. GDP report for later.

  • The pan-European FTSEurofirst 300 was still up 0.08% to 1,509.05 but reache an intraday high of 1,512.46 earlier
  • Germany’s DAX was still up by 0.09% to 12,540.30 but reache an intraday high of 12,566.66 earlier
  • The blue-chip Euro Stoxx 50 was already down by 0.14% to 3,450.55 after reaching an intraday high of 3,456.65

Major Market Mover(s):

AUD

The Aussie extended its slide from the earlier Asian session and was the biggest loser of the session (and of the day for that matter).

Westpac’s move is still likely weighing on the Aussie. And it probably didn’t help that appetite for risk was fading during the session.

AUD/USD was down by 14 pips (-0.20%) to 0.7293, AUD/NZD was down by 17 pips (-0.15%) to 1.0888, AUD/CHF was down by 15 pips (-0.21%) to 0.7125

CAD

The Loonie was the second weakest currency of the morning London session, which is rather wonky since there were no apparent catalysts and oil was actually on the rise.

Maybe we’re just seeing some profit-taking ahead of trade talks between the U.S. and Canada? The Loonie is currently the best-performing currency of the week after all, thanks to the recent progress in trade talks.

By the way, you may wanna check out Forex Gump’s Quick Primer & Updates On NAFTA.

USD/CAD was up by 21 pips (+0.16%) to 1.2946, NZD/CAD was up by 19 pips (+0.22%) to 0.8671, EUR/CAD was up by 12 pips (+0.08%) to 1.5094

EUR

The euro got slapped lower during the earlier session when that rumor about Italy asking for ECB support began to make the rounds.

And during the morning London session itself, the euro continued to slide lower without any major negative catalysts. The euro did win out against the Loonie and the Aussie, though.

EUR/USD was down by 11 pips (-0.10%) to 1.1657, EUR/JPY was down by 12 pips (-0.10%) to 129.69, EUR/GBP was down by 27 pips (-0.30%) to 0.9051

GBP

The pound easily stomped its peers and was clearly the top-performing currency of the session, which is rather wonky since there were no apparent catalysts.

The pound was gutted during yesterday’s U.S. session, though, and it’s possible that we’re seeing some short-covering ahead of Brexit Secretary Dominic Raab speech before Parliament later.

GBP/USD was up by 28 pips (+0.22%) to 1.2879, GBP/AUD was up by 55 pips (+0.32%) to 1.7657, GBP/CAD was up by 63 pips (+0.38%) to 1.6674

Watch Out For:

  • 12:30 pm GMT: U.S. preliminary GDP (downgrade from 4.1% to 4.0% expected) and U.S. GDP price index (no change from 3.0% expected)
  • 12:30 pm GMT: Canada’s current account (-$15.3B expected vs. -$19.5B previous)
  • 2:00 pm GMT: U.S. pending home sales (0.3% expected vs. 0.9% previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-0.7M expected vs. -5.8M previous)
  • 10:45 pm GMT: New Zealand’s building consents (-7.6% previous)
  • U.S. and Canada expected to resume trade talks later
  • Brexit Secretary Dominic Raab will speak before Parliament later