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The pound outperformed all its forex rivals during the morning London session, apparently because of positive U.K. economic reports that were released at the start of the session.

The Aussie, meanwhile, was the worst-performing currency, likely because the Aussie was tracking the slide in gold prices during the session.

  • French industrial production m/m: 0.6% vs. 0.5% expected vs. -0.2% previous
  • Italian industrial production m/m: -1.3% vs. -0.3% expected, 1.2% previous
  • U.K. industrial production m/m: 0.7% vs. 0.3% expected, 0.3% previous
  • U.K. manufacturing production m/m: 0.7% vs. 0.3% expected, 0.4% previous
  • Construction output in the U.K. m/m: -1.6% vs. -0.9% expected, 0.8% previous
  • U.K. goods trade balance: -£11.3B vs. -£12.9B expected, -£12.4B previous

Major Events/Reports

Net positive U.K. data

The U.K. released a slew of economic data during the session and they were positive overall.

First up is total industrial production in the U.K. during the September period, which increased by 0.7% month-on-month, which is stronger than the consensus that it would match the previous month’s pace of +0.3%. Moreover, this marks the sixth consecutive month of growth.

Year-on-year, this translates to a rise of 2.5%, accelerating from the previous month’s 1.8% and beating the consensus for a 1.9% rise. This is also the strongest reading in seven months and marks the fourth consecutive month of stronger annual readings.

A closer look at the details of the report shows that the stronger monthly and yearly growth in industrial production were both driven by higher manufacturing output, with manufacturing output growing by 0.7% month-on-month (0.3% expected, 0.4% previous) and 2.7% year-on-year (2.4% expected, 2.8% previous).

Moving on, the U.K.’s September trade report was also positive, at least on the surface, since it revealed that the U.K.’s total trade deficit fell to £2.75 billion from £3.46 billion because the trade deficit in goods narrowed from £12.4 billion to £11.3 billion instead of widening to £12.9 billion as expected.

Despite the narrower trade deficit in September, however, if we take account of the trade data for all of the Q3 months, then trade will likely be a drag on Q3 GDP since exports fell by around 0.2% between Q2 and Q3, while imports surged by 1.6%.

6th round of Brexit talks end

The sixth round of Brexit talks came to an end today, so U.K. Brexit Secretary David Davis and E.U. top Brexit negotiator Michel Barnier gave a joint conference to discuss what has transpired.

And there wasn’t a lot of progress this time around, so much so that Barnier referred to the talks as “hardly anything.”

Progress on “phase 2” or future trade talks, in particular, was limited since Barnier said that E.U. leaders were adamant that clarification and/or concession be made on the three key issues (the U.K.’s Brexit bill, the Irish border, citizens’ rights).

Risk-off day to end the week

Europe is currently on course to ending the trading week on a downbeat note since another wave of risk aversion sent the major European equity indices lower.

Market analysts blamed the general feelings of doom and gloom to growing fears that the much awaited tax reforms in the U.S. may get delayed.

However, some market analysts also say that weaker earnings growth by European companies helped to trigger profit-taking by bulls.

  • The pan-European FTSEurofirst 300 was down by 0.20% 1,531.94
  • Germany’s DAX was down by 0.10% to 13,169.25
  • The blue-chip Euro Stoxx 50 was down by 0.49% to 3,601.50

Even U.S. equity futures were weighed down by the risk aversion in Europe.

  • S&P 500 futures were down by 0.41% to 2,573.50
  • Nasdaq futures were down by 0.39% to 6,290.12

Major Market Mover(s):

GBP

The pound charged higher when a bunch of positive economic reports were released at the start of the session, so much so that the pound is not only the best-performing currency of the morning London session, but of the day (so far) as well.

GBP/USD was up by 47 pips (+0.36%) to 1.3178, GBP/AUD was up by 81 pips (+0.47%) to 1.7185, GBP/CHF was up by 38 pips (+0.29%) to 1.3102

AUD

Despite the risk-off vibes during the session, the precious metal gold was actually down by  0.13% to $1,285.88 per troy ounce, which is likely why the Aussie fared rather poorly and ended up at the bottom of the forex heap (for this session at least).

AUD/USD was down by 9 pips (-0.11%) to 0.7667, AUD/JPY was down by 23 pips (-0.26%) to 86.94, AUD/NZD was down by 25 pips (-0.23%) to 1.1040

Watch Out For:

  • 3:00 pm GMT: University of Michigan’s preliminary consumer sentiment (100.9 expected, 100.7 previous)
  • 3:00 pm GMT: University of Michigan’s preliminary inflation expectations (2.4% previous)
  • Veterans Day holiday in the U.S.A. today