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The pound pared some of its gains from yesterday and was the worst-performing currency of the session to boot. The risk-off vibes, meanwhile, likely boosted demand for the safe-haven yen.

Other than those two, the higher-yielding Aussie and Kiwi are also worth noting since they were both in recovery mode after getting a severe beat-down during the earlier Asian session. There were no apparent catalysts, though. Also, risk aversion prevailed and commodity prices were in decline. Short-covering is a possible reason, though.

And while many EUR pairs had choppy, sideways price action during the session, the euro is also worth noting since it was the second worst-performing currency of the session, thanks to late selling pressure after Germany’s CPI report failed to impress.

  • German import prices m/m: -0.2% vs. 0.0% expected, 0.5% previous
  • KOF Swiss economic barometer: 100.3 vs. 101.3 expected, 101.7 previous
  • Spanish flash HICP y/y: 2.2% vs. steady at 2.3% expected
  • German unemployment change: -8K as expected vs. -6K previous
  • U.K. mortgage approvals: 64.77K vs. 65.00K expected vs. 65.37K previous
  • U.K. net lending to individuals: £4.0B vs. £5.5B expected, £5.4B previous
  • Euro Zone business climate: 1.22 vs. 1.26 expected, 1.30 previous
  • Euro Zone consumer confidence: unchanged at -1.9 as expected
  • German flash HICP y/y: 1.9% vs. steady at 2.1% expected

Major Events/Reports:

Barnier speaks

E.U. Chief Brexit Negotiator Michel Barnier got some press time earlier during the session.

And while he maintained his positive message from yesterday, he also stressed that the E.U. must be prepared for other possible scenarios, and “That includes the no-deal scenario.”

He also noted that the Irish border issue is the “the most sensitive point” of the negotiations. However, he tried to give it a positive spin by also saying that a solution “is possible.

Scholz spricht

German Finance Minister and Vice Chancellor Olaf Scholz gave a speech after Barnier delivered his comments.

And, well, Scholz basically repeated what Barnier had to say since Scholz encouraged businesses to prepare for a disorderly Brexit since Scholz thinks it’s unclear if the E.U. can hammer out a Brexit deal with the U.K.

Oil resilient as other commodities tumble

Most commodities were broadly in retreat during the morning London session. Oil was an exception, though, since oil benchmarks added to their gains from earlier.

The slide in commodity prices is likely linked to the Greenback’s rise. In fact, market analysts were attributing the slide in copper prices to the the Greenback’s rise.

And for reference, the U.S. dollar index was up by 0.11% to 94.56 for the day when the session ended.

As to why oil prices didn’t seem to mind the Greenback’s rise, market analysts say that was due to demand for oil prices because of U.S. sanctions against Iran, as well as the draw in U.S. oil inventories.

Base metals were broadly in decline.

  • Copper was down by 0.79% to $2.715 per pound
  • Nickel was down by 0.20% to $13,425.00 per dry metric ton

Precious metals were also having a rough day.

  • Gold was down by 0.11% to $1,210.30 per troy ounce
  • Silver was down by 0.93% to $14.560 per troy ounce

As mentioned earlier, oil benchmarks were swimming against the bearish tide.

  • U.S. WTI crude oil is up by 0.66% to $69.97
  • Brent crude oil is up by 0.72% to $78.02

Gloomy vibes in Europe

The major European equity indices were broadly in the red during today’s morning London session, which is a clear sign that risk aversion holds sway once more.

And according to market analysts, the risk-off vibes in Europe were due to some disappointing earnings results, declining commodity prices, and trade-related concerns surrounding China.

  • The pan-European FTSEurofirst 300 was down by 0.36% to 1,506.92
  • Germany’s DAX was down by 0.54% to 12,493.60
  • The blue-chip Euro Stoxx 50 was down by 0.68% to 3,433.05

The risk-off vibes in Europe also dragged U.S. equity futures lower.

  • S&P 500 futures were down by 0.16% to 2,910.00
  • Nasdaq futures were down by 0.18% to 7,654.75

Global bond yields fall

Another sign that risk aversion was the name of the game in Europe was the broad-based decline in global bond yields.

  • German 10-year bond yield down by 5.88% to 0.384%
  • French 10-year bond yield down by 2.97% to 0.721%
  • U.K. 10-year bond yield down by 0.27% to 1.487%
  • U.S. 10-year bond yield down by 0.25% to 2.875%
  • Canadian 10-year bond yield down by 0.22% to 2.316%

Major Market Mover(s):

GBP

The pound began to encounter selling pressure when Barnier said that the E.U. must be prepared for a “no-deal” scenario. And more bears came out to maul the pound later on when Scholz essentially repeated what Barnier said.

GBP/USD was down by 13 pips (-0.11%) to 1.3015, GBP/JPY was down by 47 pips (-0.32%) to 145.05, GBP/CHF was down by 26 pips (-0.21%) to 1.2624

EUR

The euro didn’t really stand out that much since most EUR pairs were range-bound for the session and the euro was initially on track for a mixed finish.

However, the euro was hit by selling pressure across the board late into the session, apparently because of Germany’s disappointing CPI report. And that influx of sellers was enough to push the euro into second-to-last place (during this session at least).

EUR/USD was down by 18 pips (-0.15%) to 1.1686, EUR/JPY was down by 48 pips (-0.37%) to 130.22, EUR/CHF was down by 28 pips (-0.25%) to 1.1334

JPY

The yen finished the session in the lead, defending it’s position as the top-performing currency of the day (so far). And demand for the yen was likely sustained by the fall in global bonds yields and the risk-off environment in Europe.

USD/JPY was down by 25 pips (-0.22%) to 111.43, CHF/JPY was down by 13 pips (-0.11%) to 114.89, CAD/JPY was down by 25 pips (-0.29%) to 86.21

Watch Out For:

  • 12:30 pm GMT: Canada’s monthly GDP growth (0.1% expected vs. 0.5% previous)
  • 12:30 pm GMT: U.S. personal income (0.3% expected vs. 0.4% previous) and personal spending (0.4% expected, same as previous)
  • 12:30 pm GMT: U.S. core PCE price index (0.2% expected vs. 0.1% previous)
  • 12:30 pm GMT: U.S. initial jobless claims (214K expected vs. 210K previous)
  • 5:30 pm GMT: Deutsche Bundesbank President and ECB Member Jens Weidmann will speak
  • 11:00 pm GMT: GfK’s U.K. consumer confidence (unchanged at -10 expected)