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The Aussie and Kiwi have been climbing higher before the morning London session even rolled around, and they continued to do so during the session itself, despite the prevalence of risk aversion in Europe.

The pound, meanwhile, has been taking hits since the Asian session and remained weak throughout the morning London session. Heck, the pound even barely lost out to the retreating Greenback and was therefore the worst-performing currency of the morning London session.

  • CBI’s U.K. realized sales: 19 vs. 10 expected, 5 previous
  • RBNZ will release its Financial Stability Report later

Major Events/Reports:

Geng Shuang speaks

Chinese Foreign Ministry Spokesman Geng Shuang gave a presser during the late Asian session and before the morning London session rolled around.

And naturally, he was asked about Trump’s threat to escalate the ongoing trade war by slapping even more tariffs on Chinese goods.

Well, Geng Shuang had this to say (emphasis mine):

Not long ago, President Xi Jinping and President Trump talked by phone, during which they had an in-depth exchange of views on China-US relations and issues of mutual interest. The two heads of state agreed to seek a solution which is acceptable to both sides on the trade issues. Now the economic teams from the two countries are in contact to implement the important consensus reached by the two heads of state.

The China-US summit is just around the corner. We hope that the US can meet China halfway and follow the consensus reached by the two leaders at the telephone conversation to strive for positive outcomes of this summit.

Geng Shuang was later asked to further clarify on the “important consensus” that he mentioned earlier. And unfortunately, he had this to say (emphasis mine):

Like I just said in my previous reply, during their telephone conversation on November 1, the two heads of state agreed to seek a solution which is acceptable to both sides on the trade issues. According to my understanding, the two heads of state have also instructed their economic teams to enhance communication. Now the economic teams from the two countries are indeed following through on the consensus reached by the two heads of state.

Risk-off vibes in Europe

Risk aversion was clearly the dominant sentiment in Europe since almost all of the major European equity indices were bleeding out during the morning London session.

And market analysts pinned the blame for the risk-off vibes on renewed trade war fears after U.S. President Trump dented hopes for a potential truce or peace treaty for the ongoing trade war between the U.S. and China.

  • The pan-European FTSEurofirst 300 was down by 0.36% to 1,406.07
  • Germany’s DAX was down by 0.29% to 11,322.28
  • The blue-chip Euro Stoxx 50 was down by 0.27% to 3,164.25

Major Market Mover(s):

AUD & NZD

The Aussie and Kiwi have been rising since the earlier Asian session. And just before the morning London session got started, they both spurted higher when Geng Shuang said that there was a “important consensus,” but they quickly gave back those gains when Geng Shuang clarified that he was referring to a November 1 phone call between Xi Jinping and Trump.

Interestingly enough, there was follow-through buying after the initial tussle. Heck, follow-through buying was strong enough to apparently allow both comdolls to shrug off the risk-off vibes and outperform their peers during the morning London session.

NZD/USD was up by 23 pips (+0.34%) to 0.6800, NZD/CHF was up by 11 pips (+0.16%) to 0.6788, NZD/JPY was up by 26 pips (+0.34%) to 77.25

AUD/USD was up by 14 pips (+0.20%) to 0.7246, AUD/CHF was up by 3 pips (+0.03%) to 0.7233, AUD/JPY was up by 17 pips (+0.20%) to 82.30

GBP

The pound has been getting hammered since earlier. And during the session itself, the pound barely lost out to the Greenback and was the biggest loser of the morning London session.

There were no direct catalysts for the pound’s weakness, but some market analysts were blaming President Trump’s comments from yesterday that as Theresa May’s Brexit deal currently stands, “they may not be able to trade with the US and I don’t think they want that at all, that would be a very big negative for the deal.”

GBP/USD was down by 3 pips (-0.03%) to 1.2755, GBP/NZD was down by 65 pips (-0.35%) to 1.8755, GBP/AUD was down by 37 pips (-0.21%) to 1.7603

Watch Out For:

  • 1:30 pm GMT: U.S. Fed Governor Richard Clarida will speak
  • 2:00 pm GMT: U.S. HPI (0.4% expected vs. 0.3% previous)
  • 2:00 pm GMT: S&P/Case-Shiller U.S. composite HPI (5.3% expected vs. 5.5% previous)
  • 3:00 pm GMT: CB’s U.S. consumer confidence (136.2 expected vs. 137.9 previous)
  • 7:30 pm GMT: Atlanta Fed President Raphael Bostic will be speaking in a panel discussion
  • 8:00 pm GMT: The RBNZ will release its Financial Stability Report
  • 10:00 pm GMT: RBNZ Guv’nah Orr will give a presser on the Financial Stability Report