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There wasn’t much on the docket for today’s morning London session. Even so, there was price action and directional movement aplenty, since the yen went into Godzilla mode and trampled its rivals, with the pound and the Swissy getting crushed underfoot.

  • Swiss CPI m/m: 0.2% as expected, 0.0% previous
  • Swiss CPI y/y: 0.7% vs. 0.6% expected, 0.5% previous
  • Euro Zone retail PMI: 52.3 vs. 50.8 previous

Major Events/Reports

ECB’s meeting minutes

The minutes of the ECB’s most recent huddle were released late into the session. And well, the general message was dovish overall, although nothing we haven’t heard before.

To begin with, the minutes noted that the ECB “acknowledged that inflation dynamics remained subdued and patience was still needed for inflation to converge sustainably to levels consistent with the Governing Council’s inflation aim.”

As such, the ECB thinks that:

“[I]t should be stressed that the recent volatility of the euro exchange rate represented a source of uncertainty, which required monitoring with respect to its possible implications for the medium-term outlook for price stability. While it had to be recalled that the exchange rate was not a policy target for the ECB, it was very important for growth and inflation developments in the euro area.”

With regard to monetary policy, the minutes had these to say:

“There was broad agreement to emphasise, as on previous occasions, the need for monetary policy to remain persistent and patient.”

As for forward guidance, the minutes didn’t really have much to add to what was already said during the ECB statement since the minutes just reiterated that:

“Looking ahead, there was a benefit to clear and forward-looking communication by the Governing Council, while some flexibility was required in order to appropriately prepare and calibrate the necessary degree of monetary accommodation. Therefore, it needed to be reiterated that the Governing Council would decide in the autumn on the calibration of its policy instruments beyond the end of the year.”

Overall, the revelations in the minutes weren’t really that new since the ECB’s concerns with the euro’s recent strength have already been the subject of rumors (that cited unnamed ECB sources).

Meanwhile, certain ECB officials have already expressed their cautious attitude towards monetary policy, so there’s nothing really new on that front as well.

SNB’s Jordan speaks

Thomas Jordan, the Swiss National Bank’s (SNB) Big Boss, was cited in a Bloomberg report as saying earlier that even though there was “a certain decline in the franc’s overvaluation, the franc remains highly valued.”

Moreover, Jordan said that “The SNB isn’t thinking about changing its monetary policy,” adding that “It wouldn’t be a good idea now to tighten monetary conditions.”

Also, “The situation on foreign-exchange markets remains fragile,” according to Jordan.

This is not really new, though, since those are the same messages Jordan gave during the latest SNB monetary policy statement.

Another risk-off day in Europe

The major European equity indices were mixed but most were in negative territory during today’s morning London session. As such, risk aversion still appears to be the more dominant sentiment in Europe

And as usual, market analysts are blaming the political uncertainty in Catalonia as the main source of risk aversion in Europe.

  • The pan-European FTSEurofirst 300 was down by 0.06% to 1,532.58
  • Germany’s DAX was down by 0.22% to 12,942.75

Global bond yields drop

Another sign of the prevalence of risk aversion was the high demand for global bonds, which pushed bond yields into negative territory.

  • German 10-year bond yield down by 5.96% to 0.426%
  • French 10-year bond yield down by 5.28% to 0.715%
  • U.K. 10-year bond yield down by 2.68% to 1.342%
  • U.S. 10-year bond yield down by 0.54% to 2.319%
  • Canadian 10-year bond yield down by 0.24% to 2.115%

Major Market Mover(s):


The pound got whupped pretty hard when the morning London session rolled around.

There were no direct catalysts, but some market analysts pointed to political uncertainty as European players priced in Theresa May’s speech from yesterday, which was supposedly received rather poorly and served to erode Theresa May’s authority, rather than cement it.

GBP/USD was down by 66 pips (-0.50%) to 1.3166, GBP/NZD was down by 65 pips (-0.36%) to 1.8417, GBP/AUD was down by 63 pips (-0.37%) to 1.6845


Despite the risk-off vibes, the Swissy fared rather poorly, so much so that it was the second worst-performing currency after the pound.

The Swissy’s slide intensified shortly after SNB Boss-Man Thomas Jordan’s comments made the rounds, so it’s highly likely that Swissy bulls may have been spooked by Jordan’s words.

However, Jordan didn’t really say anything new, so it’s also possible that the SNB was sneakily weakening the Swissy again.

USD/CHF was up by 23 pips (+0.24%) to 0.9769, AUD/CHF was up by 10 pips (+0.13%) to 0.7637, NZD/CHF was up by 8 pips (+0.11%) to 0.6984


The prevalence of risk aversion, slumping global bond yields, and political uncertainty in the U.K. meant fertile ground for the safe-haven yen to prosper.

And since the Swissy was out of commission as a safe-haven currency during the session, the yen ended up as the main beneficiary of all those safe-haven flows.

It also probably helped that BOJ’s Nakaso had a speech during the session, since Nakaso said some rather optimistic things. Although Nakaso’s speech didn’t really have a direct impact on the yen’s price action.

USD/JPY was down by 26 pips (-0.23%) to 112.49, GBP/JPY was down by 109 pips (-0.73%) to 148.11, CHF/JPY was down by 53 pips (-0.47%) to 115.14

Watch Out For:

  • 12:30 pm GMT: Canada’s merchandise trade (-$2.60B expected, -$3.04B previous)
  • 12:30 pm GMT: U.S. initial jobless claims (265K expected, 272K previous)
  • 12:30 pm GMT: U.S. trade balance (-$42.7B expected, -$43.7B previous)
  • 1:10 pm GMT: U.S. Federal Reserve Governor Jerome Powell will speak
  • 2:00 pm GMT: Philadelphia Fed President Patrick Harker has a speech
  • 2:00 pm GMT: U.S. factory orders (1.0% expected, -3.3% previous)
  • 4:00 pm GMT: BOE MPC Member Ian McCafferty is scheduled to speak
  • 5:30 pm GMT: BOE MPC Member and Chief Economist Andy Haldane will be speaking