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Europe started the week with a bout of risk aversion, and the Swissy was apparently the safe-haven of choice since the Swissy easily dominated all its peers.

The risk-off vibes, meanwhile, weighed heavily on the comdolls, with the Loonie getting the worst of it and the Kiwi a close second.

The Greenback is worth highlighting as well since it’s considered a safe-haven currency but it also underperformed and was the third worst-performing currency of the session.

There were no direct catalysts for the Greenback’s weakness, but some market analysts were suggesting possible skittishness and/or profit-taking ahead of this week’s FOMC statement.

And the main beneficiary of the Greenback’s weakness was apparently the euro since the euro outpaced the yen and pound to close out the session in second place, despite not having any apparent catalyst.

  • Italy’s trade balance: €3.78B vs. €1.89B expected, €1.27B previous
  • Euro Zone final HICP y/y: 1.9% vs. no change from 2.0% expected
  • Euro Zone final core HICP y/y: unchanged at 1.0% as expected
  • Euro Zone trade balance: €12.5B vs. €14.2B expected, €13.0B previous

Major Events/Reports:

China and U.S. have verbal spat (allegedly)

According to a Reuters report that was released during the session, U.S. Trade Ambassador Dennis Shea and Chinese WTO Ambassador Zhang Xiangchen allegedly launched verbal salvos at one another at the start of the ongoing WTO meeting.

Zhang Xiangchen supposedly said that Trump’s tariffs “allowed protectionism under the guise of dubious national security concerns,” as Reuters puts it.

He also accused the U.S. of blocking the selection of judges, which has paralyzed the system.

Dennis Shea responded by defending the U.S. economy by characterizing it as “one of the most open and competitive economies in the world,” adding that criticisms that the U.S. is “unilateralist and protectionist” are unwarranted.

Shea then counter-attacked by accusing China of “non-market industrial policies and other unfair competitive practices,” adding that “The WTO is not well equipped to handle the fundamental challenge posed by China, which continues to embrace a state-led, mercantilist approach to the economy and trade.”

Risk-off start in Europe

Europe started the new week where the previous week ended, which is to say that risk aversion was plaguing Europe, sending the major European equity indices broadly lower.

And according to market analysts, Europe is starting the week on a downbeat note because of a sell-off in retail companies because of fears that pre-Christmas spending may be weaker than usual.

And to that I’d add the possibility that market players are jittery because of this week’s top-tier events, namely the FOMC statement, as well as skittishness because of the alleged verbal spat between the U.S. and China during the WTO meeting.

  • The pan-European FTSEurofirst 300 was down by 0.37% to 1,366.60
  • Germany’s DAX was down by 0.44% to 10,818.06
  • The blue-chip Euro Stoxx 50 was down by 0.49% to 3,077.45

Major Market Mover(s):


The Swissy was the one currency to rule them all during the morning London session, apparently because of the risk-off vibes in Europe and/or the SNB was not in the mood to “intervene” in the forex market today.

However, it’s also possible that the Swissy may have been in demand because of media reports during the session that the post-Brexit trade deal between the U.K. and Switzerland that was announced late last Friday has already been signed.

USD/CHF was down by 42 pips (-0.42%) to 0.9930, CAD/CHF was down by 39 pips (-0.52%) to 0.7414, EUR/CHF was down by 26 pips (-0.23%) to 1.1260


The euro added to its gains and was the second top-performing currency of the morning London session.

The one positive catalyst during the session was Italy’s better-than-expected trade report, but that’s considered a low-tier report at best. Also, the euro has been climbing broadly higher since before the session even started.

Anyhow, some market analysts suggest that the euro may have just been feeding off the Greenback’s weakness.

EUR/USD was up by 22 pips (+0.20%) to 1.1340, EUR/NZD was up by 35 pips (+0.21%) to 1.6664, EUR/CAD was up by 45 pips (+0.30%) to 1.5187


All the comdolls were feeling the heat, but the Kiwi and Loonie were particularly weak.

The Kiwi’s weakness is understandable, given the risk-off vibes in Europe, but the Loonie’s weakness is rather odd since oil prices were on the rise during the session and yet the Loonie limped to the finish line in last place.

It’s not really clear why, but preemptive positioning and/or unwinding of long positions ahead of this week’s CPI and retail sales reports are possible reasons for the Loonie’s weakness.

AUD/CAD was up by 9 pips (+0.09%) to 0.9610, GBP/CAD was up by 55 pips (+0.53%) to 1.6894, USD/CAD was up by 15 pips (+0.11%) to 1.3393

NZD/USD was down by 2 pips (-0.03%) to 0.6804, NZD/CHF was down by 30 pips (-0.45%) to 0.6756, NZD/JPY was down by 13 pips (-0.17%) to 77.04

Watch Out For:

  • 1:30 pm GMT: Canadian foreign security purchases ($6.20B expected vs. $7.70B previous)
  • 1:30 pm GMT: Empire State manufacturing index (20.2 expected vs. 23.3 previous)
  • 3:00 pm GMT: NAHB U.S. housing market index (61.0 expected vs. 60.0 previous)
  • 3:30 pm GMT: CB’s leading Australian index (-0.1% previous)