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The Swissy steamrolled over all opposition to claim the top spot, not just of the morning London session, but of the day (so far) as well. And CHF bulls can probably thank the signs of returning risk aversion for that.

The returning risk-off vibes, meanwhile, continued to dampen demand for the Aussie and the Kiwi, kicking them even lower.

Other than those three, the pound is also worth highlighting since it added to its gains ahead of Theresa May’s speech and despite negative Brexit-related rumors, but got whupped when Theresa May spoke and stuck to her guns.

Dip demand was notable, though, probably because a leadership challenge has yet to materialize.  Even so, the pound still closed out the session in third-to-last place after the Kiwi and Aussie.

  • Euro Zone current account: €16.9B vs. €24.2B expected, €24.3B previous

Major Events/Reports:

Theresa May speaks

British PM Theresa May gave a speech earlier. And since the E.U. will be holding a summit to discuss the draft deal this Sunday (Nov. 25), Theresa May’s speech was naturally mainly about Brexit.

And, well, the gist of it is that Theresa May is sticking to her guns and won’t compromise on the draft deal.

She even concluded her speech as follows (emphasis mine):

“It was never going to be easy or straightforward. And the final stage was always going to be the toughest. But we have in view a deal that will work for the UK. And let no one be in any doubt – I am determined to deliver it.”

And that’s despite a potential leadership challenge and rumblings that the DUP is not pleased with the draft deal.

Speaking of a potential leadership challenge against the PM, Sir Graham Brady, Chair of the 1922 Committee, said that the 48 letters needed to mount a challenge against the PM have not yet been met.

However, a report from The Times claimed that more than 50 MPs have “firm pledges” to submit letters of no confidence by today.

Italy-related updates

Italy’s budget drama has been pushed into the background lately. With that said, there were some interesting updates during the session.

And first up is the combative comment from Italian Deputy PM and 5-Star leader Luigi Di Maio.

Di Maio was asked about the possibility that the European Commission may launch an infringement procedure against Italy for not following the E.U.’s fiscal rules.

And Di Maio replied defiantly by saying that he’s “not worried” and that the Italian government will “carry out reforms” as planned.

Deputy PM and League leader Matteo Salvini’s comments were even more combative since Salvini threatened that “If it [the Euro Zone budget] damages Italy, as seems to be the case, obviously it will not have our support.”

Fading risk-on vibes in Europe

The major European equity indices opened higher then reached fresh intraday highs near the start of the session, which is a sign of risk-taking.

However, the major European equity indices began encountering bearish pressure about halfway through the session, forcing them to pare their gains. In fact, some of them were already in the red by the end of the session.

The earlier risk-on vibes were attributed by market analysts to strong demand for mining and technology shares due to growing hopes that ongoing trade war between the U.S. and China would de-escalate.

As for the later risk-off vibes, market analysts were blaming that on dampened demand for automobile stocks after word got around that Carlos Ghosn, Nissan and Renault chairman, is facing arrest for allegedly violating Japanese financial laws (among other things).

  • The pan-European FTSEurofirst 300 was still up by 0.05% to 1,409.92 but off the day’s high at 1,419.25
  • Germany’s DAX was already down by 0.17% to 11,321.24
  • The blue-chip Euro Stoxx 50 was still up by 0.04% to 3,182.45 but off the day’s high at 3,206.65

Major Market Mover(s):

AUD & NZD

The Aussie and the Kiwi just couldn’t get a break since and had to endure another beating during the morning London session, likely because of the risk-off vibes in Europe.

NZD/USD was down by 22 pips (-0.32%) to 0.6825, NZD/JPY was down by 21 pips (-0.27%) to 76.98, NZD/CHF was down by 39 pips (-0.57%) to 0.6805

AUD/USD was down by 15 pips (-0.21%) to 0.7298, AUD/JPY was down by 13 pips (-0.16%) to 82.32, AUD/CHF was down by 34 pips (-0.47%) to 0.7277

CHF

The Swissy was the top-performing currency of the morning London session and also happens to be the top-performing currency of the day (so far).

And we can probably thank the returning risk-off vibes for that. However, it’s worth noting that the Swissy caught a bid from the get-go, even though risk appetite initially prevailed.

No clear reason why, but safe-haven demand ahead of and during Theresa May’s speech is  possible since the Swissy returned some of its gains after Theresa May’s speech.

USD/CHF was down by 24 pips (-0.24%) to 0.9970, GBP/CHF was down by 55 pips (-0.43%) to 1.2793, CAD/CHF was down by 24 pips (-0.32%) to 0.7568

Watch Out For:

  • 3:00 pm GMT: NAHB U.S. housing market index (67 expected vs. 68 previous)
  • 3:45 pm GMT: New York Fed President John Williams is scheduled to speak