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After getting whupped earlier, the euro staged a broad-based recovery during the morning London session. The euro wasn’t the top-performing currency of the session, though, since that honor goes to the pound.

The Swissy, meanwhile, was the weakest currency of the morning London session and also happens to be the weakest currency of the day (so far).

Other than those three, the Greenback is also worth noting since it was only the third best-performing currency of the session but is currently on track to closing out the day in first place.

And market analysts were attributing the Greenback’s strength to the Fed’s decision to change its characterization of its monetary policy, as well as safe-haven demand because of Italy-related worries.

  • German GFK consumer sentiment: 10.6 vs. 10.5 expected, same as previous
  • Euro Zone consumer confidence: -2.9 as expected vs. -1.9 previous
  • Euro Zone industrial sentiment: 4.7 vs. 5.1 expected, 5.6 previous
  • German preliminary HICP m/m: 0.4% vs. 0.1% expected, 0.0% previous
  • German preliminary HICP y/y: 2.2% vs. 2.0% expected, 1.9% previous
  • Lots of central bankers will be speaking later
  • Italian cabinet meeting on budget targets later

Major Events/Reports:

Italy-related headlines

There were lots and lots of Italy-related headlines during the session, which is only natural since the Italian government is expected to present its economic and fiscal targets later.

Focusing only on the most interesting and market-moving headlines, Italian Deputy Prime Minister and 5-Star Movement Leader Luigi Di Maio said earlier that he’s “not aware of any delay.”

That statement is within the context of earlier rumors that today’s cabinet meeting on the budget will be delayed.

There were also rumors that Italian Economy Minister Giovanni Tria has supposedly threatened to resign because the coalition government was pushing for a budget deficit in excess of 2.0% of GDP.

And it didn’t help that Italian Deputy Prime Minister and League Leader Matteo Salvini said earlier that wants a budget deficit above 2.0% of GDP.

However, Tria’s spokeswoman shot down those rumors, saying that “I deny that he wants to resign. The minister is working on the budget targets ahead of today’s cabinet meeting.”

Speaking of the cabinet meeting, that’s scheduled for 4:00 pm GMT. However, there were rumors that the meeting may indeed be delayed but will start at 6:00 pm GMT, which is only a two-hour delay.

Barnier tweets about Brexit (again)

Risk aversion prevails in Europe (but fading)

The major European equity indices opened lower and then plumbed fresh intraday lows.

However, support eventually formed and the major European equity indices began clawing their way higher as the session progressed.

Bearish pressure prevailed, though, since the European bourses failed to climb back above positive territory.

And market analysts say that the risk-off vibes were due to Italy-related worries because of the news from earlier that Italy’s budget meeting may get delayed.

As to what caused the major European equity indices to trim some of their losses, that’s not yet very clear.

Relief buying is a possibility, though, since Di Maio did say that he’s not aware of any delay. And there were also later rumors that the budget meeting may be delayed but only by two hours.

Another possible reason is that the rise in oil prices helped to alleviate some of the damage as well, since energy shares were almost in positive territory by the end of the session.

  • The pan-European FTSEurofirst 300 was down by 0.04% to 1,508.99 but off the day’s low at 1,501.17
  • Germany’s DAX was down by 0.14% to 12,367.45 but off the day’s low at 12,272.59
  • The blue-chip Euro Stoxx 50 was down by 0.09% to 3,429.95 but off the day’s low at 3,408.95

Major Market Mover(s):

EUR

After getting whupped earlier, the euro staged a broad-based recovery during the morning London session.

The euro had a harder time against the Greenback, though, and had no winning chance against the pound, but the euro was able to win out against everything else quite easily.

As to what allowed the euro to recover, there’s no apparent catalysts, but relief buying and/or short-covering is a likely reason since Di Maio said that he’s not aware of any delay and later rumors came out that the delay (if any) will only be 2 hours.

EUR/USD was up by 2 pips (+0.02%) to 1.1703, EUR/JPY was up by 18 pips (+0.14%) to 132.07, EUR/CHF was up by 33 pips (+0.30%) to 1.1365

CHF

The Swissy was the biggest loser of the morning London session, probably because of easing risk aversion in Europe. However, I’ve got a feeling that the SNB may have also been involved since the Swissy showed weakness from the get-go, even though risk aversion initially dominated.

USD/CHF was up by 30 pips (+0.31%) to 0.9710, CAD/CHF was up by 14 pips (+0.20%) to 0.7432, NZD/CHF was up by 10 pips (+0.15%) to 0.6444

GBP

The pound was the best-performing currency of the morning London session. The pound got a lift when Barnier tweeted that the E.U. is working for an orderly Brexit that “should include a close economic relationship” with the U.K.

However, the pound began climbing higher across the board at around 8:00 am GMT, which is before Barnier’s tweet, and there was no apparent catalyst back then.

GBP/USD was up by 9 pips (+0.07%) to 1.3141, GBP/JPY was up by 30 pips (+0.20%) to 148.29, GBP/CHF was up by 46 pips (+0.36%) to 1.2760

Watch Out For:

  • 12:30 pm GMT: Headline (1.9% expected vs. -1.7% previous) and core (0.4% expected vs. 0.1% previous) readings for U.S. durable goods orders
  • 12:30 pm GMT: Final estimate for Q2 U.S. GDP growth (no change from 4.2% expected)
  • 12:30 pm GMT: U.S. goods trade balance (-$70.6B expected vs. -$72.0B previous)
  • 12:30 pm GMT: U.S. initial jobless claims (208K expected vs. 201K previous)
  • 12:30 pm GMT: Preliminary U.S. wholesale inventories (0.3% expected vs. 0.6% previous)
  • 1:30 pm GMT: ECB Overlord Draghi is scheduled to give a short speech
  • 2:00 pm GMT: U.S. pending home sales (-0.2% expected vs. -0.7% previous)
  • 2:00 pm GMT: BOE Guv’nah Carney will speak
  • 4:00 pm GMT: Italian Cabinet meeting on budget targets (may be delayed by 2 hours)
  • 8:30 pm GMT: Fed Chair Powell is expected to give a speech
  • 9:45 pm GMT: BOC Guv’nah Poloz will be giving a speech