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Risk-taking was the name of the game in Europe due to easing trade-related jitters. And thanks to the risk-friendly vibes, the Aussie and the Kiwi were able to claim the top spots of the session. The safe-havens yen and Greenback, meanwhile, were the biggest victims of the risk-on vibes in Europe.

Other than those four, the pound is also a noteworthy currency since it gave both the Aussie and the Kiwi a really hard time and even almost won out against the Kiwi.

As to why the pound showed strength during the session, the U.K.’s better-than-expected jobs report didn’t really do much since the pound caught a bid before the report was released. And according to some market analysts, it’s possible that we’re just seeing some short-covering after yesterday’s severe beat-down.

  • French final private payrolls q/q: 0.1% vs. unchanged at 0.2% expected
  • Chinese new yuan loans: 1,250B vs. 1,200B expected, 697B previous
  • U.K. jobless rate: steady at 4.1% as expected
  • U.K. average earning (3m y/y): 3.3% vs. 3.0% expected, 3.1% previous
  • Claimant count change in the U.K.: 21.9K vs. 13.2K expected, 23.2K previous
  • German ZEW economic sentiment: -17.5 vs. -25.0 expected, -24.1 previous
  • Euro Zone ZEW economic sentiment: -21.0 vs. -23.2 expected, -22.0 previous
  • NFIB U.S. small business index: 104.8 vs. 107.3 expected, 107.4 previous

Major Events/Reports:

U.K. jobs report

The Office for National Statistics (ONS) released the U.K.’s latest jobs report earlier during the session.

And it revealed that the jobless rate in the three months to October was steady at 4.1%, which is in-line with expectations.

The number of people who claimed unemployment benefits, meanwhile, increased by 21.9K in November, which is a bit disappointing since the market was only expecting a 13.2K increase.

As for wage growth, average weekly earnings surged by 3.9% year-on-year in October (+2.9% previous), which is the strongest annual increase since March 2015.

And that brings the three-month average up to 3.3% (+3.1% previous), contrary to expectations for a further slowdown to +3.0%.

And while the strong reading was due mainly to 18.1% increase in bonuses paid (-5.4% previous), if we strip bonuses to get only the regular earnings, then wages still grew by 3.5% (+3.1% previous), which is the best reading since October 2008.

Moreover, real wage growth (inflation is taken into account) increased by 1.8% year-on-year in October (+0.7% previous), the strongest annual increase since July 2016.

And if we exclude bonuses, real wages still increased by 1.3% (+0.9% previous), which is the best reading since November 2016.

China to cut tariffs on imported U.S. cars?

According to a Bloomberg report that cited “people familiar with the matter,” a proposal has supposedly been “submitted to China’s Cabinet to be reviewed in the coming days.” And the proposal was supposedly about slashing the tariffs on imported U.S. cars from 40% to 15%.

If true, then that’s a very good sign for trade talks between the U.S. and China. After all, Trump happily tweeted the following after the G20 Summit.

Brexit-related updates

There were some Brexit-related updates during the session, but they were not really market-moving. They’re still worth highlighting, though.

And first up is European Commission President Jean-Claude Juncker’s comment that:

“There is no room whatsoever for renegotiation but of course there is room, if used intelligently, to give further clarifications and interpretations without opening the withdrawal agreement. Everybody has to know the withdrawal agreement will not be reopened.”

In other words, the backstop solution is there to stay, which is bad news for Theresa May. However, Juncker did say that there is room for “further clarifications and interpretations.”

And according to Brexit minister Martin Callanan, Theresa May is meeting with E.U. leaders, including Juncker, because she wants an assurance “that the U.K. cannot be trapped permanently in the backstop.” Callahan also added that “it is very important that these have to be additional legally binding reassurances.”

However, there were rumors that:

And finally, Theresa May’s spokesman announced that:

“The government will ensure that the matter is brought back to the Commons before 21 January.”

No set date yet, however.

Very risk-friendly day in Europe

After getting roughed up yesterday, risk sentiment switched to “risk-on” during today’s morning London session, propelling almost all of the major European equity indices higher.

And according to market analysts, the sudden switch in risk sentiment was due to bargain buying and growing hopes that the trade war truce between the U.S. and China will lead to a more lasting peace (and a trade deal).

The Bloomberg report I noted earlier also kept the hope alive and directly gave the major European equity indices a noticeable boost.

  • The pan-European FTSEurofirst 300 was up by 1.75% to 1,362.31
  • Germany’s DAX was up by 2.00% to 10,834.07
  • The blue-chip Euro Stoxx 50 was up by 1.78% to 3,070.55

Major Market Mover(s):


The Aussie and Kiwi were already showing signs of recovery during the earlier Asian session.

And during the morning London session itself, they were the top-performing currencies, thanks to the risk-friendly vibes in Europe, although they both did have a hard time against the recovering pound.

AUD/USD was up by 19 pips (+0.26%) to 0.7214, AUD/JPY was up by 25 pips (+0.31%) to 81.64, AUD/CHF was up by 14 pips (+0.20%) to 0.7131

NZD/USD was up by 18 pips (+0.26%) to 0.6884, NZD/JPY was up by 23 pips (+0.30%) to 77.90, NZD/CHF was up by 12 pips (+0.18%) to 0.6804


The risk-friendly vibes may have been great for the Aussie and Kiwi, but they were rather toxic to the safe-havens, with the yen getting the worst of it, followed by the Greenback.

USD/JPY was up by 5 pips (+0.04%) to 113.16, CAD/JPY was up by 24 pips (+0.29%) to 84.57, CHF/JPY was up by 16 pips (+0.14%) to 114.50

EUR/USD was up by 15 pips (+0.14%) to 1.1383, USD/CAD was down by 31 pips (-0.24%) to 1.3380, USD/CHF was down by 10 pips (-0.10%) to 0.9881

Watch Out For:

  • 1:30 pm GMT: Headline (0.0% expected vs. 0.6% previous) and core (0.1% expected vs. 0.5% previous) readings for U.S. PPI
  • 6:15 pm GMT: British PM Theresa May and European Commission President Jean-Claude Juncker will meet
  • 7:15 pm GMT: RBNZ Guv’nah Orr will testify before the Finance and Expenditure Select Committee