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The yen easily trounced all opposition and was the champion of the morning London session, apparently because the yen is the safe-haven of choice as risk aversion plagued Europe.

The euro and the pound, meanwhile, were both feeling the pain, with the ECB presser still being blamed for the euro’s slide while Brexit-related uncertainty is being cited as the reason for the pound’s weakness.

Other than those three, the Greenback is also noteworthy since it barely won out against the Kiwi and the Aussie and was the second top-performing currency after the yen, even as the U.S. GDP report loomed.

  • German GFK consumer climate: 10.6 vs. 10.5 expected, 10.6 previous
  • U.S. GDP report coming up

Major Events/Reports:

ECB survey

The ECB released its Q4 2018 ECB Survey of Professional Forecasters near the start of the session.

And unfortunately, the survey results showed that respondents lowered their GDP growth forecasts for 2018 (+2.0% vs. 2.2% previous) and 2019 (+1.8% vs. 1.9% previous).

And while headline HICP inflation forecasts were unchanged, forecasts for underlying inflation were downgraded in 2018 (+1.1% vs. +1.2% previous) and 2019 (+1.4% vs. +1.5% previous).

Rate hike expectations deteriorate post-ECB

According to a Reuters report, odds for a September 2019 rate hike now only stands at around 50%, much lower compared to the “nearly 90 percent on Monday.”

Commodities sink but precious metals rise

Most commodities got a good stomping during the morning London session. Not all commodities were on the defensive, however, since precious metals were in demand.

The slide in commodity prices may have been prompted by the Greenback’s recovery. And for reference, the U.S. dollar index was up by 0.17% to 96.62 for the day when the session ended. It was in the red earlier and hit an intraday low of 96.32.

Aside from Greenback strength, market analysts also blamed the poor performance of base metals such as copper on the stock market rout since that raised concerns that global growth may slow, which would naturally mean weaker demand for industrial metals.

The slide in oil prices, meanwhile, was also blamed by market analysts on fears of a global slowdown, although Saudi Arabia’s warning of a potential oversupply was also cited as another reason for the slide in oil prices.

As to why precious metals were shining, that’s likely because of safe-haven demand. After all, precious metals are considered as traditional safe-havens.

Oil benchmarks got torpedoed.

  • U.S. WTI crude oil is down by 1.40% to $66.39
  • Brent crude oil is down by 1.08% to $76.06

Base metals were bleeding out.

  • Copper was down by 1.19% to $2.716 per pound
  • Nickel was down by 2.21% to $11,882.50 per dry metric ton

Precious metals were swimming against the bearish tide.

  • Gold was up by 0.79% to $1,238.80 per troy ounce
  • Silver was up by 0.61% to $14.700 per troy ounce

Intense risk-off vibes in Europe

Europe is closing out the trading week with a general feeling of doom and gloom since the major European equity indices were broadly and deeply in negative territory.

Market analysts blamed the risk-off vibes on disappointing earnings results and the poor performance of tech companies. The usual general themes were also invoked, namely the ongoing trade war between the U.S. and China and rising input costs.

And to that I’d add the usual skittishness ahead of the U.S. GDP report.

  • The pan-European FTSEurofirst 300 was down by 1.51% to 1,376.92
  • Germany’s DAX was down by 1.89% to 11,093.90
  • The blue-chip Euro Stoxx 50 was down by 1.91% 3,106.65

Major Market Mover(s):

JPY

The yen reigned supreme during the morning London session, very likely because of safe-haven flows due to the intense risk-off vibes in Europe.

USD/JPY was down by 22 pips (-0.19%) to 112.01, AUD/JPY was down by 23 pips (-0.30%) to 78.71, CAD/JPY was down by 27 pips (-0.32%) to 85.20

USD

The Greenback was the second top-performing currency of the morning London session.

There were no apparent catalysts, but market analysts were pointing to possible preemptive buying ahead of the U.S. GDP report.

AUD/USD was down by 8 pips (-0.11%) to 0.7028, USD/CHF was up by 25 pips (+0.25%) to 1.0021, USD/CAD was up by 18 pips (+0.14%) to 1.3147

EUR

The euro was the biggest loser of the session. And the apparent catalyst was the ECB’s survey report since the euro began encountering sellers after that was released.

The euro also encountered more sellers when that Reuters report that I mentioned earlier was released, so the ECB presser is still apparently weighing down on the euro.

EUR/USD was down by 31 pips (-0.27%) to 1.1337, EUR/JPY was down by 59 pips (-0.46%) to 126.96, EUR/AUD was down by 29 pips (-0.18%) to 1.6130

GBP

The pound was only able to score a win against the euro and was therefore the second biggest loser of the session.

There were no direct catalysts for the pound’s weakness, but market analysts were pointing to Brexit-related uncertainty without really highlighting a specific reason.

GBP/USD was down by 29 pips (-0.23%) to 1.2781, GBP/JPY was down by 55 pips (-0.38%) to 143.16, GBP/AUD was down by 20 pips (-0.11%) to 1.8185

Watch Out For:

  • 12:30 pm GMT: U.S. advanced Q3 GDP estimate (3.3% expected vs. 4.2% previous) and GDP price index (2.1% expected vs. 3.3% previous); read Forex Gump’s Event Preview
  • 2:00 pm GMT: University of Michigan’s revised consumer sentiment index (98.9 expected vs. 99.0 previous)
  • 2:00 pm GMT: ECB Overlord Draghi is scheduled to give a short speech