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Trading conditions were still relatively subdued during the morning London session and ahead of the G20 Summit.

However, the session wasn’t a complete snooze fest since some themes were playing out, namely Greenback strength and Aussie weakness.

And while the Loonie was mixed for the session, it’s also worth noting since it found late buyers after NAFTA 2.0 was signed.

The pound’s also noteworthy since it jumped higher across the board at the start of the session when Conservative MP Liam Fox showed support for Theresa May’s Brexit deal and asked his fellow MPs to offer support.

However, the pound quickly returned those gains and began trading sideways, closing out the session mixed but a net loser. No apparent reason for the subsequent slide, though.

  • Nationwide U.K. HPI m/m: 0.3% vs. 0.1% expected, 0.0% previous
  • German import prices m/m: 1.0% vs. 0.4% expected, same as previous
  • German retail sales m/m: -0.3% vs. 0.4% expected, 0.1% previous
  • French preliminary HICP y/y: 2.2% vs. 2.3% expected, 2.5% previous
  • KOF Swiss leading indicators: 99.1 vs. 99.6 expected, 100.2 previous
  • Italian jobless rate: 10.6% vs. 10.1% expected, 10.3% previous
  • Euro Zone HICP y/y: 2.0% vs. 2.1% expected, 2.2% previous
  • Euro Zone jobless rate: 8.1% vs. 8.0% expected, 8.1% previous
  • Italian GDP q/q: -0.1% vs. 0.2% expected, same as previous

Major Events/Reports:

NAFTA 2.0 officially signed

U.S. President Trump, Canadian PM Trudeau, and outgoing Mexican President Peña Nieto met for a little signing ceremony at the G20 summit in Buenos Aires, Argentina.

And the focus of the signing ceremony, of course, was NAFTA 2.0, otherwise know as the United States–Mexico–Canada Agreement (USMCA), although Canada insists that it should be called the Canada-United States–Mexico Agreement(CUSMA).

Do note, however, that the NAFTA 2.0 saga ain’t over yet since the signed deal has yet to be ratified by the legislative body of all three countries. And some Democrats are already threatening to vote against NAFTA 2.0.

Euro Zone’s HICP report

It’s the end of the trading month, so the latest batch of inflation reports for the Euro Zone and its member states were released earlier during the session.

And focusing only on the HICP report for the Euro Zone as a whole, well, that was unfortunately a disappointment since it revealed that the Euro Zone’s HICP rose by 2.0% year-on-year in September, which is a three-month low and weaker than the +2.1% consensus.

But on a slightly more optimistic note, the reading is still well above the ECB’s forecast that headline HICP will increase by 1.7% year-on-year in 2018, as reported in the September Eurosystem/ECB Staff Macroeconomic Projections.

Delving deeper into the report, HICP less energy, one of the ECB’s preferred measures for core inflation, eased from +1.3% to +1.2%, which is rather disappointing since that’s below the ECB’s forecast that HICP less energy will print a 1.3% annual increase by year-end.

As for HICP less energy and unprocessed food, another of the ECB’s preferred measures for core inflation, that also weakened from +1.2% to +1.1%, but is still meeting the ECB’s forecast of +1.1% by the end of the year.

Commodities clobbered

Commodities got a good beating during the morning London session, forcing them to erase their gains from earlier. In fact, most commodities are now in the red for the day.

And it’s probably safe to blame the commodities rout on the Greenback’s rise. And for reference, the U.S. dollar index was up by 0.17% to 96.868 for the day when the session came to a close. It was in the red earlier and reached an intraday low of 96.63.

Aside from Greenback strength, market analysts also blamed the slide in base metal prices on poor Chinese manufacturing data from earlier.

The slump in oil prices, meanwhile, was blamed by market analysts on rising crude oil inventories, which offset growing hopes for another OPEC oil cut deal.

Oil benchmarks were hit hard.

  • U.S. WTI crude oil is down by 1.50% to $50.68
  • Brent crude oil is down by 1.25% to $59.16

Base metals were actually mixed since some were still in the green, but almost all are off their respective highs.

  • Copper was down by 0.34% to $2.780 per pound
  • Tin was down by 0.03% to $18,547.50 per dry metric ton

Precious metals were also down despite the risk-off vibes in Europe.

  • Gold was down by 0.17% to $1,228.30 per troy ounce
  • Silver was down by 0.50% to $14.330 per troy ounce

Risk-off ending in Europe

Europe is closing out the week with a bit of risk aversion since most of the major European equity indices were bleeding out during today’s morning London session.

And according to market analysts, skittishness ahead of the G20 summit and poor Chinese data from earlier dented demand for auto and mining shares, which then soured overall risk sentiment.

Of course, it’s also possible that we’re just seeing some profit-taking. After all, risk appetite has been the dominant sentiment in Europe this week.

  • The pan-European FTSEurofirst 300 was down by 0.46% to 1,404.88
  • Germany’s DAX was down by 0.63% to 11,227.27
  • The blue-chip Euro Stoxx 50 was down by 0.28% to 3,165.25

Major Market Mover(s):

USD

The Greenback was broadly higher during the morning London session. There were no direct catalysts, but safe-haven demand is a probable reason, although short-covering after Fed Chair Powell gutted the Greenback is also another probable reason.

USD/JPY was up by 7 pips (+0.06%) to 113.53, USD/CHF was up by 12 pips (+0.12%) to 0.9976, USD/CAD was up by 5 pips (+0.04%) to 1.3301

AUD

The Aussie was nudged broadly lower and was the worst-performing currency of the session, likely because of falling gold prices, the risk-off vibes, and Greenback strength. Of course, profit-taking is also a possibility. After all, the Aussie is currently one of the top-performing currencies of the week.

AUD/USD was down by 11 pips (-0.15%) to 0.7301, AUD/JPY was down by 7 pips (-0.09%) to 82.88, AUD/CAD was down by 11 pips (-0.12%) to 0.9710

Watch Out For:

  • 1:30 pm GMT: Canada’s monthly (0.1% expected, same as previous) and quarterly (2.0% expected vs. 2.9% previous) GDP readings; read Forex Gump’s preview
  • 1:30 pm GMT: Canada’s RMPI (-5.2% expected vs. -0.9% previous) and IPPI (-0.5% expected vs. 0.1% previous)
  • 2:00 pm GMT: New York Fed President John Williams expected to speak in a panel discussion
  • 2:45 pm GMT: Chicago PMI (58.6 expected vs. 58.4 previous)