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London session traders seemed to brush political uncertainty in the U.K. and the euro zone aside for the time being, allowing the pound and the euro to score some pips off positive data. Meanwhile, the lower-yielding dollar and yen gave up some ground on risk-taking.

  • Swiss unemployment rate improved from 3.2% to 3.1% instead of holding steady
  • German trade surplus widened from 19.3B EUR to 21.6B EUR vs. 19.8B EUR forecast
  • French industrial production dipped 0.3% instead of posting 0.4% gain
  • Italian industrial production grew 1.2% vs. projected 0.1% uptick
  • U.K. goods trade deficit widened from 12.8B GBP to 14.2B GBP
  • U.K. manufacturing production increased 0.4% vs. projected 0.2% gain
  • U.K. construction output up 0.6% vs. estimated flat reading
  • U.K. industrial production expanded by 0.2% as expected
  • OPEC Sec-Gen Barkindo: Oil market seeing fast return to normalcy
  • Barkindo: 2018 global oil demand to stay at 1.4M barrels per day

Major Events/Reports

Mostly upbeat euro zone data

Medium-tier reports from the region came in mostly in the green, underscoring expectations for ECB tapering before the year comes to a close.

In Germany, the trade surplus widened from 19.3 billion EUR to 21.6 billion EUR, far outpacing the consensus at 19.6 billion EUR. Components of the report revealed that the expansion was due to a 3.1% jump in exports from July to August overshadowing a 1.2% increase in imports.

Over in Italy, industrial production surged by 1.2% versus the projected 0.1% uptick. On a less upbeat note, France reported a surprise 0.3% drop in industrial production instead of the estimated 0.4% gain.

Strong showing from U.K. reports

The Brits weren’t to be outdone with positive data, allowing the pound to flex some muscle as well and briefly overlook the looming uncertainties from Brexit.

Manufacturing production was at front and center with its 0.4% gain versus the estimated 0.2% increase for August. Industrial production, meanwhile, came in line with expectations of a 0.2% uptick. Underlying data revealed that all four main sectors increased with the largest contribution from manufacturing.

Construction output also beat consensus with a 0.6% gain versus the estimated flat reading, chalking up a bit of a rebound from the earlier 1.0% slide.

On the flip side, the goods trade balance wasn’t so uplifting as the deficit widened from a downgraded 12.8 billion GBP to 14.2 billion GBP versus the projected 11.4 billion GBP shortfall. This was mostly due to a switch from a surplus to a deficit on the balance of erratic commodities such as non-monetary gold, although excluding this effect still yields a 1.7 billion GBP increase in the deficit for August.

Another round of positive remarks from OPEC

OPEC Secretary General Barkindo has been spreading good cheer for crude oil so far this week, as his latest round of remarks emphasized how the market has been able to rebalance quickly.

Barkindo mentioned that they are witnessing a fast return to normalcy and that global demand could be sustained at 1.4 million barrels per day throughout 2018. He praised Saudi Arabia for pledging an unprecedented but welcome production cut in November, urging other new members to join these output cuts as well.

During his speech in the India Energy Forum in New Delhi, Barkindo also emphasized how the OPEC and the U.S. have agreed to work together to ensure the market remains stable and that the parties will reconvene to discuss a potential deal.

“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle.”

Major Market Mover(s):

EUR & GBP

European currencies caught a bid once positive data points were printed and political uncertainties such as Catalonia’s independence call took the back seat.

EUR/USD is up 51 pips to 1.1791 (+0.43%), GBP/USD advanced to 1.3194 (+0.40%), EUR/NZD climbed 42 pips to 1.6660 (+0.26%), and GBP/JPY is up to 148.25 (+0.12%)

USD & JPY

The lower-yielding tandem slid slightly lower for the day as traders appear to be renewing their appetite for risk.

USD/CAD is down 42 pips to 1.2508 (-0.34%), USD/JPY retreated to 112.35 (-0.29%), AUD/JPY is up to 79.54 (+0.21%), NZD/USD is up to .7077 (+0.17%), and USD/CHF is up 37 pips to .9760 (-0.38%)

Watch Out For:

  • 11:00 am GMT: U.S. NFIB Small Business Index (drop from 105.3 to 105.1 expected)
  • 1:00 pm GMT: U.K. NSIER GDP estimate
  • 1:15 pm GMT: Canadian housing starts (211K expected, 223K previous)
  • 1:30 pm GMT: Canadian building permits (-0.9% expected, -3.5% previous)
  • 3:00 pm GMT: FOMC member Kashkari’s testimony
  • 3:00 pm GMT: U.S. IBD/TIPP Economic Optimism index
  • 7:00 pm GMT: BOC Gov Council Member Wilkins’ speech