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The pound got a rather severe pounding during the morning London session, very likely because of renewed Brexit fears due to the media blitz against British PM Theresa May’s perceived failure in Salzburg.

One currency’s loss is another currency’s gain. And in this case, it was apparently the Swissy that benefited from the pound’s pain.

  • French flash manufacturing PMI: 52.5 vs. 53.3 expected, 53.5 previous
  • French flash services PMI: 54.3 vs. 55.3 expected, 55.4 previous
  • German flash manufacturing PMI: 53.7 vs. 55.7 expected, 55.9 previous
  • German flash services PMI: 56.5 vs. 55.0 expected, 55.0 previous
  • Euro Zone flash manufacturing PMI: 53.3 vs. 54.5 expected, 54.6 previous
  • Euro Zone flash services PMI: 54.7 vs. 54.4 expected, 54.4 previous
  • U.K. public sector net borrowing: £5.B vs. £2.9B expected, -£3.9B previous

Major Events/Reports:

Media blitz against Theresa May

There were already rumblings yesterday that British PM Theresa May’s meeting with E.U. leaders at the Salzburg E.U. summit didn’t go too well.

And today, the British media machine unleashed a media blitz that, well, didn’t paint a pretty picture of Theresa May and reignited Brexit-related concerns to boot.

BBC News has a compilation of today’s headlines, but here are a few (courtesy of BBC Editor Allie Hodgkins-Brown) to give y’all a feel of what the headlines were about.

Euro Zone PMI reports

Markit released the latest batch of PMI reports for Germany, France, and the Euro Zone as a whole. And unfortunately, most of them failed to meet expectations.

Focusing only on the PMI reports for the Euro Zone as a whole, the manufacturing PMI reading dropped even further from 54.6 to a 24-month low of 53.3 in September, which is rather disappointing since the market was only expecting a downtick to 54.5.

The services PMI reading, meanwhile, improved slightly from 54.4 to a three-month high of 54.7.

Overall, however, the PMI reports painted a negative picture since the Euro Zone’s composite PMI fell from 54.5 to a four-month low of 54.2.

And according to Markit, the slump in the manufacturing PMI reading was due to “export orders stagnating for the first time in over five years.”

Chris Williamson, Markit’s Chief Business Economist, explained that stagnant growth in export orders was due to “Trade wars, Brexit, waning global demand (notably in the auto industry), growing risk aversion, destocking and rising political uncertainty both within the Eurozone and further afield.

And while the services PMI reading improved, Markit noted that “New inflows of business slowed … and backlogs of work showed the second-weakest rise in over a year, hinting at slower service sector activity and employment growth in coming months.”

Risk-friendly ending in Europe

The major European equity indices are enjoying another bout of risk-taking during today’s morning London session, so Europe is apparently on track to closing out the week on a high note.

And as usual, market analysts were attributing the risk-friendly vibes on relief buying as trade-related jitters ease amid hopes that China and the U.S. may finally sit down and reason together.

  • The pan-European FTSEurofirst 300 was up by 0.56% to 1,505.38
  • Germany’s DAX was up by 0.69% to 12,411.52
  • The blue-chip Euro Stoxx 50 was up by 0.62% to 3,425.75

Major Market Mover(s):

GBP

The pound got a severe pounding during the session, apparently because of renewed Brexit-related concerns due to the media blitz against Theresa May.

GBP/USD was down by 74 pips (-0.56%) to 1.3172, GBP/JPY was down by 102 pips (-0.69%) to 148.45, GBP/CHF was down by 122 pips (-0.96%) to 1.2584

EUR

The euro was the second weakest currency of the morning London session. And the euro’s weakness appears to have been due to the Euro Zone’s disappointing PMI reports, although the disappointing Brexit-related headlines may have also weighed on the euro.

EUR/USD was down by 23 pips (-0.20%) to 1.1760, EUR/JPY was down by 44 pips (-0.34%) to 132.53, EUR/CHF was down by 69 pips (-0.62%) to 1.1234

CHF

The euro was the best-performing currency of the morning London session, even though risk-taking persisted in the European equities market.

And based on price action, the Swissy began gaining strength at around the same time that the pound began to tank, so it’s probable that renewed Brexit-related concerns sent safe-haven flows towards the Swissy.

USD/CHF was down by 39 pips (-0.40%) to 0.9553, AUD/CHF was down by 36 pips (-0.51%) to 0.6959, NZD/CHF was down by 36 pips (-0.56%) to 0.6380

Watch Out For:

  • 12:30 pm GMT: Headline (0.3% expected vs. -0.2% previous) and core (0.6% expected vs. -0.1% previous) readings for Canadian retail sales
  • 12:30 pm GMT: Canada’s CPI (-0.1% expected vs. 0.5% previous); read Forex Gump’s Event Preview
  • 1:45 pm GMT: Markit’s U.S. flash manufacturing PMI (55.1 expected vs. 54.7 previous)
  • 1:45 pm GMT: Markit’s U.S. flash manufacturing PMI (54.9 expected vs. 54.8 previous)