Partner Center Find a Broker

The Aussie was the top-performing currency of the morning London session, while the Kiwi was a net winner, which is rather interesting since risk aversion was the name of the game in Europe.

The Greenback and the yen, meanwhile, were the biggest losers of the session. And again, risk aversion was the dominant sentiment in Europe.

As for other currencies of note, the euro and the pound are also noteworthy since the pound found late buyers and was able to snag second place from the Kiwi. The euro, meanwhile, was steadily in demand throughout the session and eventually outpaced the Kiwi to close out the session in third place.

Both the euro and the pound may have been feeding off the Greenback’s weakness. And in the pound’s case, Brexit-related optimism may have also helped to provide support.

  • French final HICP y/y: 2.5% as expected, 2.6% previous
  • Spanish HICP y/y: 2.3% vs. 2.2% expected, same as previous
  • U.S. CPI report coming up

Major Events/Reports:

ECB’s meeting minutes

The minutes of the ECB’s most recent monetary policy meeting were released late into the session.

And after a quick read, there doesn’t seem to be anything new from what ECB Overlord Draghi said during the September 13 ECB presser.

Well, there was one interestiong bit. You see, the ECB downgraded its growth projections during the September ECB statement and Draghi explained the reason for the downgrades as follows:

“That [rising protectionism] is the major source of uncertainty which, by the way, is reflected in the current macroeconomic projections only to the extent of the measures that have been implemented already.”

However, the ECB still maintained that risks to the outlook were still “balanced” overall.

Well, the minutes reiterated that “balanced” outlook but also revealed that some ECB officials may be getting worried because the minutes noted that:

“[I]t was remarked that a case could also be made for characterising the risks to activity as now being tilted to the downside given the clear prevalence of downward global risks.”

However, the ECB chose to keep its “balanced” outlook because the “underlying strength of the economy was judged to be mitigating downside risks to activity.”

Intense risk aversion in Europe

Risk aversion continued to plague Europe, sending the major European equity indices broadly and deeply lower during the morning London session.

And market analysts blamed the intense risk-off vibes on risk sentiment spillover from the earlier session since market analysts are still pointing to the sell-off in Wall Street as the reason for the feelings of doom and gloom in Europe.

Plunging oil prices may have also poisoned risk sentiment since oil and energy shares were the biggest loser of the session.

  • The pan-European FTSEurofirst 300 was down by 1.80% to 1,417.17
  • Germany’s DAX was down by 1.30% to 11,560.51
  • The blue-chip Euro Stoxx 50 was down by 1.44% to 3,220.65

U.S. bond yields plunge

U.S. bond yields have been falling since the earlier session (since yesterday’s U.S. session actually) and they continued to do so during the first half of the morning London session, before eventually turning higher during the later half.

And according to market analysts, bond yields were dropping because of safe-haven demand for bonds because of the intense risk aversion in Europe, as well as jitters ahead of the U.S. CPI report.

  • U.S. 30-year bond yield down by 1.06% to 3.388%
  • U.S. 10-year bond yield down by 1.40% to 3.227%
  • U.S. 5-year bond yield down by 1.40% to 3.073%
  • U.S. 2-year bond yield down by 0.85% to 2.902%

U.S. bond yields weren’t the only ones in the red since most European bond yields were also deep in the red.

  • German 10-year bond yield up by 4.17% to 0.528%
  • French 10-year bond yield up by 1.25% to 0.888%
  • U.K. 10-year bond yield up by 1.85% to 1.698%

Major Market Mover(s):


The Aussie was the top-performing currency of the morning London session, even though risk aversion was the dominant sentiment.

There were no apparent catalysts, but U.S. bond yields were down and the Greenback was reeling in pain, so it’s likely that the Aussie was gaining at the Greenback’s expense.

It also probably helped that gold prices were on the rise during the session.

AUD/USD was up by 22 pips (+0.32%) to 0.7096, AUD/JPY was up by 28 pips (+0.35%) to 79.68, AUD/CHF was up by 13 pips (+0.19%) to 0.7007


The Greenback and the yen were the biggest losers of the morning London session, despite the intense risk-off vibes.

The Greenback was likely down in the dumps because it’s tracking the fall in U.S. bond yields.

As for the yen, there’s no clear reason for that, but it’s possible that market players are becoming hesitant to load up on the yen after BOJ Member Makoto Sakurai warned during the earlier session that “there’s a risk that [Japan’s] growth could fall short of such main projections depending on the extent of protectionist moves and capital outflow from emerging economies.”

NZD/USD was up by 13 pips (+0.21%) to 0.6487, EUR/USD was up by 32 pips (+0.28%) to 1.1576, USD/CHF was down by 12 pips (-0.13%) to 0.9874

NZD/JPY was up by 18 pips (+0.24%) to 72.85, EUR/JPY was up by 42 pips (+0.32%) to 129.99, CHF/JPY was up by 20 pips (+0.18%) to 113.71


The pound was bid higher on most pairs during the session, but it only began taking ground from the Aussie and Kiwi late into the session. And there were enough buyers to allow the pound to win out against the Kiwi and claim second place (during this session at least).

There was no apparent reason for the later buyers, but market analysts have been noting that there are growing hopes for a Brexit deal before the October 18 E.U. Summit, thanks largely to Barnier’s comment yesterday. And that may have helped to boost the pound.

Of course, it’s also possible that the pound was just feeding off the Greenback’s weakness, but that doesn’t explain why the pound was able to overtake the Kiwi and fight back against the Aussie.

GBP/USD was up by 37 pips (+0.28%) to 1.3231, GBP/JPY was up by 49 pips (+0.33%) to 148.57, GBP/CHF was up by 20 pips (+0.15%) to 1.3064

Watch Out For:

  • 12:30 pm GMT: Headline (0.2% expected, same as previous) and core (0.2% expected vs. +0.1% previous) readings for U.S. CPI; read Forex Gump’s Event Preview
  • 12:30 pm GMT: U.S. initial jobless claims (207K expected, same as previous)
  • 12:30 pm GMT: Canada’s NHPI (0.1% expected, same as previous)
  • 3:00 pm GMT: U.S. crude oil inventories (2.3M expected vs. 8.0M previous)
  • 9:30 pm GMT: Business NZ manufacturing index (52.0 previous)