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Battle lines were clearly drawn between the safe-haven currencies and the higher-yielders during the morning London session. And among the safe-haven currencies (USD, CHF, JPY), it was the yen that emerged as the champion.

The Aussie, meanwhile, was the biggest loser of the session, likely because the apparent trigger for today’s bout of risk aversion was a report that China is asking for permission from the WTO to impose sanctions against the U.S.

As for the other currencies, the euro is worth noting since it was the third biggest loser of the session after the Aussie and Kiwi, likely because it was reeling from the Greenback’s strength.

And while the pound was mixed for the session, it’s also worth highlighting since it tossed and turned when the U.K.’s net positive jobs report was released.

No clear reason why, but it’s possible that some GBP bulls were using the jobs report and the Greenback’s strength as an excuse to unwind some of their positions since reports about China’s plans began to circulate shortly after the U.K.’s jobs report was released.

  • French private payrolls q/q: 0.1% vs. 0.2% expected, same as previous
  • Japanese preliminary machine tool orders y/y: 5.3% expected vs. 13.1% previous
  • U.K. jobless rate: steady at 4.0% as expected
  • U.K. average earning (3m y/y): 2.6% vs. 2.4% expected, same as previous
  • Claimant count change in the U.K.: 8.7K vs. 6.9K expected, 6.2K previous
  • German ZEW economic sentiment: -10.6 vs. -13.5 expected, -13.7 previous
  • Euro Zone employment change q/q: 0.4% as expected, same as previous
  • Euro Zone ZEW economic sentiment: -7.2 vs. -10.9 expected, -11.1 previous
  • U.S. NFIB small business index: 108.8 vs. 108.0 expected, 107.9 previous

Major Events/Reports:

U.K. jobs report

The Office for National Statistics (ONS) released the U.K.’s latest jobs report earlier during the session.

And that revealed that the jobless rate in the three months to July held steady at 4.0%, which is the best reading “since December 1974 to February 1975” and is in-line with expectations.

However, the number of people who claimed unemployment benefits rose by 8.7K in August, exceeding expectations for a 6.9K increase. Worse, the previous reading was revised from 6.2K to 10.2K.

But on a happier note, average weekly earnings surged by 3.1% year-on-year in July, which is the best reading since December 2017. And the strong reading in July meant that the three-month average comes in at 2.6%, beating expectations that it would hold steady at 2.4%.

And while the 1.9% increase in bonuses did help to drive wage growth, underlying wage growth was also actually strong.

If we strip the 1.9% increase in bonuses to get regular wages, then regular wages still grew by 3.1% (+2.8% previous), which is the strongest increase since July 2015.

Wage growth also seems to be keeping up with inflation since real wages grew by 0.8% year-on-year in July.

And if we only focus on real regular earnings, then that also increased by 0.8%, marking the sixth consecutive month of growth.

More trade war stuff

According to reports, a September 21 meeting agenda from the WTO was published earlier and it stated that the WTO’s dispute settlement body will hear China’s request for permission to impose sanctions on the U.S. for anti-dumping violations.

And to give that news its proper context, the case is actually old since China started the dispute proceedings way back on 2013 and received a favorable decision from the WTO back in 2017.

The U.S. was given until August 22 of this year to comply with the WTO’s decision. However, the U.S. openly admitted on August 27 that they haven’t fully complied, which is why China is asking for permission to punish the U.S.

Whoop-dee-doo!

BOE Carney to stick around

In his speech before Parliament, British Chancellor of the Exchequer Philip Hammond said that BOE Guv’nah Mark Carney is willing to stay on as the BOE’s final boss character until January 2020 (that’s 7 extra months).

And in a letter from Carney that was read by Hammond, Carney explained his willingness to stick around as follows:

“I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England and I can confirm that I would be honoured to extend my term to January 2020.”

Risk aversion strikes back

The major European equity indices were bleeding red during the morning London session, so risk aversion has finally made a comeback it seems.

And according to market analysts, the feelings of gloom and doom in Europe were due to renewed trade war fears as focus shifts back to the ongoing trade war between the U.S. and China.

  • The pan-European FTSEurofirst 300 was down by 0.47% to 1,459.97
  • Germany’s DAX was down by 0.74% to 11,897.30
  • The blue-chip Euro Stoxx 50 was down by 0.68% to 3,289.45

U.S. equity futures were also down in the dumps, which implies that the risk-off vibes may spillover into the upcoming U.S. session.

  • S&P 500 futures were down by 0.30% to 2,871.50
  • Nasdaq futures were down by 0.28% to 7,439.00

Major Market Mover(s):

JPY

There was a three-way battle for domination between the yen, the Swissy, and the Greenback, thanks to the risk-off vibes during the session. There can be only one champion, however, and that happens to be the yen.

USD/JPY was down by 10 pips (-0.09%) to 111.36, EUR/JPY was down by 56 pips (-0.43%) to 129.03, GBP/JPY was down by 60 pips (-0.41%) to 144.91

AUD

The higher-yielding Aussie lost out to the Kiwi and was the biggest loser of the session, likely because it was getting extra selling pressure since the catalyst for the risk-off vibes in Europe was China-related.

AUD/USD was down by 23 pips (-0.32%) to 0.7100, AUD/JPY was down by 33 pips (-0.42%) to 79.07, AUD/CHF was down by 33 pips (-0.48%) to 0.6914

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (213K expected vs. 206K previous)
  • 2:00 pm GMT: U.S. final wholesale inventories (0.7% expected, same as previous)
  • 2:00 pm GMT: U.S. JOLTS job openings (6.68M expected vs. 6.66M previous)