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The euro got a good thrashing and was the worst-performing currency of the morning London session. And the main beneficiary of the euro’s weakness was apparently the Greenback.

The Greenback wasn’t the top-performing currency of the session, however, since that honor goes to the safe-haven yen.

  • GfK’s German consumer climate: 10.4 vs. 10.3 expected, 10.4 previous
  • German import prices m/m: -1.0% vs. 1.0% previous
  • French consumer spending m/m: -0.3% vs. 0.0% expected, 0.9% previous
  • U.K. final Q3 GDP q/q: unchanged at 0.6% as expected
  • U.K. current account: -£26.5B vs. -£21.7B expected, -£20.0B previous
  • U.K. public sector net borrowing: £6.3B vs. £7.0B expected, £5.6B previous

Major Events/Reports:

ECB’s economic bulletin

The ECB released an economic bulletin during the session and the report noted right off the bat that:

“Growth in economic activity has moderated significantly in the euro area since the end of 2017. Indeed, quarter-on-quarter GDP growth in the euro area fell to 0.2% in the third quarter of 2018, down from 0.7% in the fourth quarter of 2017.”

However, the report’s overall tone became a bit more optimistic as one reads further since the report noted that:

“[G]rowth in domestic demand remained comparable to the levels seen in the first part of the economic expansion from 2014 to 2016l.”

“The slowdown in 2018 has been driven largely by external factors, in particular the weakness in external demand. Indeed, much like the strengthening of growth in 2017, the slowdown in 2018 has been driven by net exports.”

“Several temporary factors have also weighed on the growth profile. In the first half of 2018, weather conditions, sickness and industrial action affected output in a number of countries.”

And since the Euro Zone’s domestic economy is still doing okay, and since the Euro Zone’s slowdown was due to “external” and “temporary” factors, the report concluded that:

“All in all, the recent slowdown in growth has not, thus far, called into question the fundamentals of the current economic expansion.”

However, the report ended with this warning:

“[U]ncertainty about external developments has clearly increased the risks to the euro area’s economic outlook. Consequently, the possible implications for domestic demand and the fundamentals of the expansion need to be monitored closely.”

That’s not really new, however, since ECB Overlord Draghi also gave that warning during last week’s ECB presser.

Trump tweets (about The Wall)

U.S. President Trump was up early and tweeting about the Great Wall of America, which only drove home the point that there’s a real risk for a partial government shutdown.

Risk-off ending in Europe

Europe is closing out the week on a downbeat note since almost all of the major European equity indices were bleeding out during the session.

And market analysts say that the gloomy mood in Europe was due to expectations that credit conditions will tighten, thanks to the Fed’s rate hike and forward guidance, as well as jitters because of a potential U.S. government shutdown.

  • The pan-European FTSEurofirst 300 was up down 0.46% to 1,322.76
  • Germany’s DAX was down by 0.28% to 10,580.88
  • The blue-chip Euro Stoxx 50 was down by 0.51% to 2,984.85

Month-end flows?

December (and the year for that matter) will soon be coming to a close. And since it’s gonna be Christmas season next week, some month-end (and year-end) capital flows are to be expected as hedge funds, mutual funds, pension funds, and other large players rebalance their portfolios and/or prepare to make cash distributions.

And these month-end flows sometimes result in some rather wonky price action, which may be why we’re seeing some wonky price action today.

Major Market Mover(s):


The euro got rushed by sellers right when the session started and then encountered even more sellers when the ECB’s economic bulletin was released, which is a bit odd since the report didn’t really say anything new.

Anyhow, there were no apparent catalysts for the euro’s slide at the start of the session, but market analysts were pointing to technicals, year-end flows, and the expiration of option contracts.

But then again, it’s possible that we’re just seeing some profit-taking. After all, the euro is currently one of the biggest winners of the week.

EUR/USD was down by 54 pips (-0.47%) to 1.1414, EUR/GBP was down by 29 pips (-0.32%) to 0.9018, EUR/JPY was down by 64 pips (-0.50%) to 126.96


The yen barely won out against the Greenback to claim the top spot, not just of the morning London session, but of the day (so far) as well, thanks to the risk-off vibes in Europe.

USD/JPY was down by 5 pips (-0.05%) to 111.21, CHF/JPY was down by 53 pips (-0.47%) to 112.21, AUD/JPY was down by 24 pips (-0.30%) to 78.91


Despite concerns of a possible partial U.S. government shutdown, the Greenback managed to outperform during the morning London session.

There were no apparent catalysts for the Greenback’s strength, but market analysts were suggesting that the Greenback was likely just feeding off the euro’s weakness.

USD/CHF was up by 43 pips (+0.44%) to 0.9910, USD/CAD was up by 32 pips (+0.24%) to 1.3534, AUD/USD was down by 20 pips (-0.28%) to 0.7094

Watch Out For:

  • 1:30 pm GMT: Canada’s monthly GDP growth (0.2% expected vs. -0.1% previous)
  • 1:30 pm GMT: Headline (0.5% expected vs. 0.2% previous) and core (0.2% expected vs. 0.1% previous) readings for Canadian retail sales
  • 1:30 pm GMT: U.S. final Q3 GDP (no change from 3.5% expected)
  • 1:30 pm GMT: Headline (1.7% expected vs. -4.3% previous) and core (0.3% expected vs. 0.2% previous) readings for U.S. durable goods orders
  • 3:00 pm GMT: BOC business outlook survey
  • 3:00 pm GMT: Euro Zone’s consumer confidence index (steady at -4 expected)
  • 3:00 pm GMT: U.S. core PCE price index (0.2% expected vs. 0.1% previous)
  • 3:00 pm GMT: U.S. personal income (0.3% expected vs. 0.5% previous) and personal spending (0.3% expected vs. 0.6% previous)
  • 3:00 pm GMT: University of Michigan’s revised consumer sentiment (no change from 97.5 expected)