The safe-haven yen was in demand during the session, thanks to the risk-off vibes. The yen only finished in second place, however, since the yen was easily outclassed by the Kiwi.
The Greenback, meanwhile, was broadly weaker during the session after showing strength during the earlier session.
As for other currencies of note, the euro and the pound are both worth highlighting since they were mostly steady during the session after getting a beating earlier and despite more negative Brexit-related news.
- Italian industrial production m/m: -0.2% vs. -0.5% expected, 1.7% previous
- BOF French business sentiment: 104.0 vs. 105.0 previous
China’s Trade Situation Report
China’s Ministry of Commerce released its latest Trade Situation Report earlier during the session.
And, well, the report generally painted a positive assessment for trade in the first three quarters of 2018.
More importantly, the report noted that:
“The current Sino-US trade friction has a limited impact on China’s foreign trade.”
However, China also warned that:
“[T]he high import and export base in the fourth quarter of 2017 will have a certain adverse impact on the growth rate of imports and exports in the fourth quarter of 2018.”
And while China pointed out that “At present, the fundamentals of China’s foreign trade development are good, the policy environment is constantly improving, and it contains new development potential,” China also warned that:
“[T]he environment facing China’s foreign trade development in 2019 is more severe and complex, and the downside risks of the world economy are increasing.”
And quite naturally, China blamed the downbeat outlook on protectionism (without naming Trump).
Brexit has been under the spotlight since the earlier session. And the morning London session was no different, since there were plenty of Brexit-related headlines flying about during the session.
And focusing only on the most interesting and/or market-moving Brexit news, first up is the statement from the European Council on the state of Brexit negotiations.
And unfortunately, the statement revealed that (emphasis mine):
“Michel Barnier explained that intense negotiating efforts continue, but an agreement has not been reached yet. Some key issues remain under discussion, in particular a solution to avoid a hard border between Ireland and Northern Ireland.”
Next is a Reuters report which cited an unnamed “government source” as saying that there was no cabinet meeting scheduled for today, contrary to earlier rumors that a meeting was scheduled for today but was canceled by British PM Theresa May because of resistance from her own cabinet members of her cabinet.
It’s also worth pointing out at this point that since the E.U. reported earlier that “an agreement has not been reached yet,” tomorrow’s cabinet meeting will probably be a non-event since Theresa May and her cabinet can’t really sign off on an agreement that hasn’t been hammered out yet.
Anyhow, the lack of progress in Brexit talks was highlighted again later on when The Guardian cited an unnamed “Whitehall source” as saying that “There’s no breakthrough at the moment.”
Finally, Tom Newton Dunn, Political Editor of The Sun, delivered this disappointing news:
More: Tusk has told No10 that a deadline for a November summit is this Wednesday night. But it appears the Govt is beginning to give up hope for one. Whitehall source: "I wouldn't get your hopes up".
— Tom Newton Dunn (@tnewtondunn) November 12, 2018
So, the likelihood is now a December 13/14 summit, which pushes the Meaningful Vote into January. Will be very tight to pass all the ensuing Brexit deal legislation in less than 3 months, meaning Article 50 could have to be extended by a month or two.
— Tom Newton Dunn (@tnewtondunn) November 12, 2018
Gloomy start in Europe
Europe is apparently starting the new week where the previous week ended since the major European equity indices were bleeding out during the session, which is a sign that risk aversion is still plaguing Europe.
And according to market analysts, the feelings of doom and gloom in Europe were due to disappointing earnings results, as well as Brexit-related jitters and skittishness ahead of the tomorrow’s Italian budget deadline.
- The pan-European FTSEurofirst 300 was down by 0.26% to 1,432.94
- Germany’s DAX was down by 0.84% to 11,432.47
- The blue-chip Euro Stoxx 50 was down by 0.41% to 3,216.25
Major Market Mover(s):
The Kiwi was the top-performing currency of the morning London session, even though risk aversion was the dominant sentiment in Europe.
And the apparent catalyst for the Kiwi’s strength is China’s Trade Situation Report since the Kiwi (and the Aussie as well) caught a bid when that report was released.
NZD/USD was up by 29 pips (+0.44%) to 0.6744, NZD/JPY was up by 13 pips (+0.17%) to 76.79, NZD/CHF was up by 25 pips (+0.38%) to 0.6803
The risk-off vibes spurred safe-haven demand for the yen, but the yen only finished the session in second place since it lost out to the Kiwi.
USD/JPY was down by 30 pips (-0.27%) to 113.86, CAD/JPY was down by 19 pips (-0.22%) to 86.28, CHF/JPY was down by 24 pips (-0.21%) to 112.86
The Greenback is still a net winner for the day but it was the biggest loser of the session.
And based on price action and the available catalysts, it looks like the Greenback began to encounter sellers after China’s Trade Situation Report was released.
USD/CAD was down by 6 pips (-0.05%) to 1.3195, EUR/USD was up by 12 pips (+0.11%) to 1.1272, GBP/USD was up by 16 pips (+0.12%) to 1.2872
Watch Out For:
- 7:30 pm GMT: San Francisco Fed President Mary Daly will speak
- Remembrance Day holiday in Canada today
- Veterans Day holiday in the U.S.A. today