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Price action was rather choppy during today’s morning London session. Some pairs even traded sideways and were flat for the session.

Even so, some themes were clearly playing out. And chief among them was the two-way action on the pound. Another is the yen’s broad-based strength and yet another was the Greenback’s retreat.

  • Spanish HICP m/m: 0.6% vs. 0.8% expected, 0.2% previous
  • Spanish HICP y/y: 1.9% vs. 2.0% expected, 2.0% previous
  • Euro Zone business climate: 1.3 vs. steady at 1.1 expected
  • Euro Zone consumer confidence: -1.2 as expected, -1.5 previous
  • German HICP m/m: 0.0% vs. 0.1% expected, 0.2% previous
  • German HICP y/y: 1.8% vs. 1.9% expected, 1.8% previous

Major Events/Reports

BOE’s Carney speaks

BOE Guv’nah Mark Carney gave a short speech earlier today. And, well, Carney apparently reignited Brexit-related concerns when he said that the BOE can’t prevent the negative effects of Brexit on the U.K. economy.

To quote from the man himself:

“Even though monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU, it can influence how this hit to incomes is distributed between job losses and price rises.”

Carney did say that the BOE will do what it can to “mitigate” the risks and negative effects associated with Brexit.

“The Bank will do everything it can to support adjustment consistent with its statutory obligations. We will continue to assess and express our independent assessment of the risks associated with Brexit. We will also use all our powers, consistent with our remits, to mitigate those risks and to smooth the adjustment to new opportunities.”

Brexit Secretary Davis speaks

Shortly after Carney spoke, Brexit Secretary David Davis gave a speech at a press conference that’s meant to conclude the fourth round of Brexit negotiations.

And according to Davis, talks were conducted in a “constructive and determined manner,” which is why he believes that both sides are “making decisive steps forward.”

Moreover, Davis said that the transition period “will ensure people, businesses and public services only have to plan for one set of changes,” adding that he believes that “this should be quick to agree.”

Davis then said gave a brief report on the “real progress” that have been achieved so far.

With regard to citizens’ rights, the U.K. and the E.U. “have agreed [on] most aspects of social security coordination.”

As for the U.K.’s bill to leave the E.U., Davis reassured that “the UK will honour its commitments made during the period of our membership.” However, he also said that “We are not yet at the stage of specifying exactly what these commitments are.”

Signs of returning risk aversion

European equity indices had a good start but began giving back their gains later. And according to market analysts, the early risk-on vibes was due to strong demand for banks amid higher expectations for a Fed rate hike. However, disappointing results for individual companies soured risk sentiment later.

  • The pan-European FTSEurofirst 300 was already down by 0.05% to 1,514.93
  • Germany’s DAX was still up by 0.25% to 12,688.75 but off the day’s high at 12,709.00
  • The blue-chip Euro Stoxx 50 was still up by 0.09% to 3,560.50 but off the day’s high at 3,563.01

The returning risk-off vibes pushed U.S. equity futures into the red.

  • S&P 500 futures were down by 0.07% to 2,502.75
  • Nasdaq futures were down by 0.09% to 5,935.63

Major Market Mover(s):

GBP

The pound took a plunge early on, apparently as a reaction to Carney’s statement that the Bank can’t nullify the negative effects of Brexit on the U.K. economy and can only mitigate them at best.

However, the pound made a U-turn later and surged higher, apparently as a reaction to Brexit Secretary Davis’ comments that “real progress” was made during this week’s Brexit talks.

GBP/USD was up by 38 pips (+0.29%) to 1.3415 with 1.3342 as session low, GBP/AUD was up by 33 pips (+0.19%) to 1.7157 with 1.7052 as session low, GBP/CHF was up by 35 pips (+0.27%) to 1.3060 with 1.3002 as session low

JPY

Signs of returning risk-off vibes apparently gave the yen a boost since it was the second strongest currency of the morning London session.

USD/JPY was down by 38 pips (-0.34%) to 112.64, AUD/JPY was down by 21 pips (-0.24%) to 88.07, CHF/JPY was down by 36 pips (-0.31%) to 115.71

USD

The Greenback took a step back and was the worst-performing currency of the morning London session.

There were no apparent catalysts for the Greenback’s weakness, but some market analysts say that the Greenback was only consolidating after capturing gains earlier.

AUD/USD was up by 8 pips (+0.10%) to 0.7819, NZD/USD was up by 14 pips (+0.19%) to 0.7191, EUR/USD was up by 32 pips (+0.27%) to 1.1773

Watch Out For:

  • 12:30 pm GMT: Final U.S. Q2 GDP estimate (no change from 3.0% expected)
  • 12:30 pm GMT: U.S. initial jobless claims (269K expected, 259K previous) and goods trade balance (-$65.0B expected, -$65.1B previous)
  • 1:45 pm GMT: Kansas City Fed President Esther George will speak
  • 2:15 pm GMT: Fed Governor Stanley Fischer is scheduled to speak
  • 9:45 pm GMT: New Zealand’s building consents (-0.7% previous)