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Price action during the morning London session was relatively muted and many currency pairs were essentially range-bound.

However, some themes were clearly playing out, namely demand for the Loonie, likely because of recovering oil prices, and selling pressure on the safe-haven Swissy, likely because of the risk-friendly vibes in Europe.

The pound is also worth highlighting since it started the session by stumbling a bit, but quickly regained its footing and marched higher against all its peers, only to encounter late sellers and close out the session in second-to-last place.

  • Spanish unemployment change: 52.2K vs. 20.4K
  • Sentix Euro Zone investor confidence: 8.8 vs. 9.9 expected, 11.4 previous
  • U.K. services PMI: 52.2 vs. 53.4 expected, 53.9 previous

Major Events/Reports:

U.K. services PMI

Markit released the U.K.’s latest services PMI report earlier today. And, well, it was a disappointment since the headline reading fell from 53.9 to a seven-month low of 52.2. The market was only expecting a soft tumble to 53.4.

According to Markit, the weaker-than-expected headline reading was due to “the weakest upturn in new work since July 2016.”

And according to survey respondents, “Brexit-related uncertainty and concerns about the global economic outlook had constrained demand growth for business services.”

But on a more upbeat note, Markit pointed out that “a moderate rate of job creation continued across the service sector.”

Moreover, input prices rose at the fastest pace since June. Even better, the increase in input prices “was mainly linked to higher transport costs and rising staff wages.”

Better still (particularly for CPI), “Higher operating expenses led to the fastest rise in prices charged by service sector firms since June.”

Schinas speaks

European Commission spokesman Margaritis Schinas got some press time earlier. And when he asked about the state of Brexit negotiations, he replied by saying that “We are not there yet.”

Brexit-related rumor

Tom Newton Dunn, Political Editor of The Sun newspaper, shared the following late into the session.

Oil recovers

After taking hits earlier, oil benchmark staged a recovery during the morning London session and largely erased the losses from earlier.

The earlier dip in oil prices was blamed by market analysts on news that the U.S. will grant waivers that will allow some countries to continue buying oil from Iran, even as U.S. sanctions against Iran are reimposed today.

As to what triggered the recovery in oil prices, there’s no apparent catalyst for that since oil benchmarks turned higher at around 9:00 am GMT when there were no major oil-related news.

  • U.S. WTI crude oil was up by 0.48% to $63.04
  • Brent crude oil was up 0.55% to $73.05

Risk-friendly start in Europe

The major European equity indices had a weak start. However, it soon became apparent that risk-taking was making a comeback since the major European equity indices began pulling up and most were even in positive territory already by the end of the morning London session.

And market analysts say that the risk-off vibes from earlier were due to risk sentiment spillover from the earlier Asian session, with higher Fed rate hike expectations, U.S. midterm election jitters, and the ongoing trade war between the U.S. and China still being blamed for the skittish risk sentiment.

As for the later risk recovery, the catalyst for that is still not clear. However, the energy sector outperformed, so it’s probable that the recovery in oil prices may have been the reason for the recovery in risk sentiment.

  • The pan-European FTSEurofirst 300 was up by 0.34% to 1,434.48
  • Germany’s DAX was up by 0.29% to 11,552.84
  • The blue-chip Euro Stoxx 50 was up by 0.40% to 3,227.15

Major Market Mover(s):

CHF

The safe-haven Swissy was the biggest loser of the morning London session, likely because of the risk-friendly vibes in Europe.

USD/CHF was up by 26 pips (+0.26%) to 1.0067, EUR/CHF was up by 10 pips (+0.10%) to 1.1438, NZD/CHF was up by 26 pips (+0.27%) to 1.0068

GBP

The pound stumbled when the morning London session rolled around and before the U.K.’s services PMI report was released.

And when the PMI report was finally released, the pound tried to slide even lower. However, dip demand was present and limited the pound’s losses, probably because the details of the PMI report were not too bad, particularly with regard, to jobs growth, wage growth, and inflationary pressure.

After a short tussle, the bulls finally began to win out. Unfortunately for GBP bulls, sellers returned when E.U. Commission Schinas gave a reality check on the state of Brexit talks.

And more GBP bears came out of the woods to maul the bulls when The Sun’s Tom Newton Dunn sent out those tweets.

GBP/USD was down by 33 pips (-0.25%) to 1.2973 but reached a session high of 1.3027, GBP/CAD was down by 49 pips (-0.29%) to 1.6998 but reached a session high of 1.7067, GBP/NZD was down by 43 pips (-0.22%) to 1.9503 but reached a session high of 1.9568

CAD

The Loonie overcame all opposition and was the one currency to rule them all (during this session at least). And from the looks of it, CAD pairs appear to have been tracking the recovery in oil prices.

USD/CAD was down by 5 pips (-0.04%) to 1.3102, AUD/CAD was down by 13 pips (-0.14%) to 0.9418, NZD/CAD was down by 8 pips (-0.10%) to 0.8714

Watch Out For:

  • 1:10 pm GMT: BOC Guv’nah Poloz will speak
  • 2:45 pm GMT: Markit’s finals U.S. services PMI (no change from 54.7 expected)
  • 3:00 pm GMT: ISM’s U.S. non-manufacturing PMI (59.4 expected vs. 61.6 previous)