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Price action was tighter during the morning London session, at least when compared to the action-packed Asian session from earlier. Even so, the morning London session was quite interesting since the Kiwi continued to bleed out, albeit not as much compared to earlier. The pound and the yen, meanwhile, were duking it out, with the pound ultimately coming out on top.

  • French industrial production m/m: -1.1% vs. -0.6% expected, 1.9% previous
  • Italian trade balance: €4.50B vs. €3.87B expected, €4.34B previous
  • U.K. industrial production m/m: 0.5% vs. 0.1% expected, 0.0% previous=
  • U.K. manufacturing production m/m: 0.0% as expected, -0.1% previous
  • U.K. construction output m/m: -0.1% vs. 1.4% expected, -0.4% previous
  • U.K. goods trade balance: -£12.7B vs. -£11.0B expected, -£11.3B previous

Major Events/Reports

Net negative U.K. reports

The U.K. released a bunch of economic reports earlier today. And, well, they were negative overall.

First off, the U.K.’s total trade deficit widened from a revised £2.516 billion to £4.564 billion in June, thanks to the goods trade deficit coming in at £12.7 billion instead of narrowing a bit from £11.3 billion to £11.0 billion as expected.

This brings the U.K.’s total trade deficit for Q2 to £8.944 billion, which is only slightly bigger than £8.839 billion deficit reported in Q1, so trade won’t be that big of a drag on quarterly GDP, but still a drag nonetheless.

Moving on, total industrial production rose by 0.5% month-on-month in June, which is a faster rise compared to the +0.1% consensus. Moreover, the previous reading was revised higher from a 0.1% contraction to a flat 0.0%.

However, total industrial production fell by 0.4% quarter-on-quarter, which is the in-line with the first estimate for U.K. Q2 GDP, so industrial production will not have any impact on GDP growth, even though the June reading came in better-than-expected.

Another risk-off day in Europe

Another day, another selloff across the major European equity indices. And as usual, market analysts blamed the persistent feeling of (literal) doom and gloom to geopolitical events, namely the ongoing tension between the U.S. and North Korea.

  • The pan-European FTSEurofirst 300 was down by 0.45% to 1,487.09
  • Germany’s DAX was down by 0.67% to 12,073.75
  • The blue-chip Euro Stoxx 50 was down by 0.61% to 3,446.50

The risk-off vibes also pushed U.S. equity futures into negative territory.

  • S&P 500 futures were down by 0.36% to 2,464.12
  • Nasdaq futures were down by 0.56% to 5,889.12

Major Market Mover(s):

NZD

The Kiwi extended its losses during the morning London session, although the bleed-out was not as severe compared to the earlier Asian session. Even so, the Kiwi still ended up as the worst-performing currency of the session.

By the way, if you’re wondering why the Kiwi got sold off hard during the earlier Asian session, you can check out Forex Gump’s latest write-up here.

NZD/USD was down by 10 pips (-0.14%) to 0.7265, NZD/JPY was down by 19 pips (-0.24%) to 79.79, NZD/CHF was down by 6 pips (-0.09%) to 0.7024

JPY

The yen had another good run during today’s morning London session. And we can probably thank the persistent risk-off vibes for that.

USD/JPY was down by 10 pips (-0.10%) to 109.84, CHF/JPY was down by 21 pips (-0.19%) to 113.59, EUR/JPY was down by 19 pips (-0.15%) to 128.80

GBP

The pound was in recovery mode during the morning London session. It even shrugged off the net negative economic reports that were released during the course of the session.

There’s no clear reason as to why the pound somehow outperformed to come out on top, but the pound has been sliding since the BOE statement, so we’re probably just seeing some profit-taking.

GBP/USD was up by 20 pips (+0.16%) to 1.2997, GBP/CHF was up by 31 pips (+0.25%) to 1.2565, GBP/NZD was up by 57 pips (+0.32%) to 1.7884

Watch Out For:

  • 12:30 pm GMT: Canada’s NHPI (0.5% expected, 0.7% previous)
  • 12:30 pm GMT: U.S. initial jobless claims (240K expected, same as previous)
  • 12:30 pm GMT: Headline (0.1% expected, same as previous) and core (0.2% expected, 0.1% previous) readings for U.S. PPI
  • 2:00 pm GMT: New York Fed President William Dudley will speak
  • 6:00 pm GMT: U.S. Federal budget balance (-$60.9B expected, -$90.2B previous)