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Compared to yesterday’s action-packed session, today’s morning London session was much more subdued and choppy, with many pairs trading sideways. Even so, the Loonie was clearly on the move as it easily steamrolled all its forex rivals.

  • UBS Swiss consumption indicator: 1.39 expected, 1.34 previous
  • German import prices m/m: -1.0% vs. -0.6% expected, -0.1% previous
  • U.K. Nationwide HPI m/m: 1.1% vs. 0.1% expected, -0.2% previous
  • Credit Suisse economic expectations: 20.7 vs. 30.8 previous
  • French consumer confidence: 108.0 vs. 103.0 expected, 102.0 previous
  • Euro Zone private loans y/y: 2.6% vs. 2.5% expected, 2.4% previous
  • Italian preliminary CPI m/m: -0.1% vs. 0.1% expected, -0.2% previous
  • Top central bankers will be in a panel discussion later

Major Events/Reports

ECB’s Constancio speaks

In a CNBC interview earlier today, ECB Vice President Vitor Constancio sounded somewhat more dovish compared to ECB Overlord Draghi’s tone yesterday.

Specifically, Constancio noted that “domestic factors of inflation starting with wage and cost developments and then also price decisions are not responding the way we [the ECB] would expect in view of our more common estimates of this slack.”

As such, ECB officials are asking themselves the following question: “are these measures of the slack of the economy correct?

Constancio then warned that it’s possible that the slack in the economy may be greater than the ECB had originally estimated, which is why Constancio opted to focus on Draghi’s caveats and warnings rather than on Draghi’s hawkish comment that the ECB “can accompany the recovery by adjusting the parameters of its policy instruments.”

To quote directly from Constancio:

“That being the case it justifies fully what the president said at the end of his speech (on Tuesday) that we need persistence. If we want to bring inflation to our target of below but close to 2 % then we have to persist in the type of monetary policy that we been adopting.”

Oil off its lows

Oil benchmarks recovered some poise (but were still in the red) after getting swamped by sellers earlier after the American Petroleum Institute (API) released a report saying that U.S. crude oil inventories rose by 851,000 barrels last week, which is contrary to forecasts that U.S. oil inventories fell by 2.1 million barrels.

Other than profit-taking by shorts ahead of the U.S. Energy Information Administration’s (EIA) official inventory numbers, there are no apparent catalysts, however.

  • U.S. WTI crude oil was down by 0.27% to $44.12 per barrel after reaching a low of $43.80 earlier
  • Brent crude oil was down by 0.02% to $46.91 per barrel after reaching a low of $46.55 earlier

Risk aversion prevails in Europe

Europe got hit by another wave of risk aversion that sent European equity indices into the red once more.

  • The pan-European FTSEurofirst 300 was down by 0.35% to 1,513.92
  • Germany’s DAX was already down by 0.42% to 12,619.50
  • The blue-chip Euro Stoxx 50 was down by 0.33% to 3,526.50

Market analysts said that tech stocks, particularly cybersecurity stocks, got hit the hardest and soured overall risk sentiment in the process, thanks to yesterday’s global cyberattack.

Major Market Mover(s):

CAD

The Loonie was the only real mover during today’s morning London session. There were no direct catalysts, but it’s very likely that the Loonie got a boost because of recovering oil prices.

Also, it’s possible that Loonie shorts are unwinding their positions or Loonie bulls are opening preemptive positions ahead of BOC Governor Poloz’s participation in the panel discussion later.

USD/CAD was down by 54 pips (-0.41%) to 1.3087, NZD/CAD was down by 41 pips (-0.43%) to 0.9514, AUD/CAD was down by 57 pips (-0.48%) to 0.9936

Watch Out For:

  • 12:30 pm GMT: U.S. goods trade balance (-$66.2B expected, -$67.1B previous)
  • 12:30 pm GMT: U.S. preliminary wholesale inventories (0.2% expected, -0.5% previous)
  • 1:30 pm GMT: ECB Overlord Draghi, BOC Governor Poloz, BOE Guv’nah Carney, and BOJ Shogun Kuroda will be in panel discussion at the ECB’s ongoing forum on central banking
  • 2:00 pm GMT: U.S. pending home sales (0.9% expected, -1.3% previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-2.1M expected, -2.5M previous)