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The risk-off vibes lent wings to the safe-havens yen and Swissy. The Swissy got the better of it, though, since the Swissy ended up as the top-performing currency of the morning London session, probably because SNB officials were not paying attention. I’m just (half) kidding of course.

The same risk-off environment was pretty toxic to the higher-yielding currencies, however, with the Kiwi getting the worst of it. Although the Aussie and the Loonie were also in rough shape, even though commodities rose during the session.

The pound, meanwhile, extended its losses from the earlier Asian session but ended up mixed because the pound was able to gain the upper hand against the comdolls.

As for the dollar and the euro, the former was mixed but a net winner for the session while the  latter had choppy price action but somehow ended up as the third best-performing currency, despite dovish comments from ECB’s Constâncio.

  • German wholesale price index m/m: 0.0% vs. 0.4% expected, 0.6% previous
  • German wholesale price index y/y: 3.0% vs. 3.4% previous
  • Chinese new yuan loans: 663B vs. 781B expected, 1,270B previous

Major Events/Reports

ECB’s Constâncio speaks

ECB Vice President Vítor Constâncio gave a speech earlier. He first talked about the wonderful “sustained economic recovery in the euro area as a whole and in all its member states.”

He then said that deflation risks have been diminished, but was quick to add that “inflationary pressures have not materialised, vnor can they be foreseen in the immediate future,” which is a rather dovish thing to say.

Constâncio did acknowledge that underlying inflation has been ticking higher. But he still gave it a dovish spin by also noting that underlying inflation has “yet to show convincing signs of a sustained upward trend.”

Given all those pessimistic comments about inflation, Constâncio concluded by saying that:

“We are not yet fulfilling our mandate and that is why monetary policy will have to continue to be very accommodative.”

BOE Haldane’s blog post

Earlier today, the BOE published MPC Member and Chief Economist Andy Haldane’s town hall blog  about Haldane’s visit to Oxfam, Greater Manchester back on November 3.

And according to this Haldane’s blog (emphasis mine):

“Indeed, the main reason the Bank raised rates last week was to keep a lid on inflation. Price rises across the whole economy are currently running well above the 2% inflation target and are expected to remain above-target for the next few years.”

Haldana also said (wrote, to be more exact) that people he spoke to saw little negative impact on lending costs from a rate hike. To quote from Haldane himself:

“[S]mall adjustments in the cost of borrowing were unlikely to have a significant impact on their daily lives. The borrowing costs they faced for access to consumer credit were largely unaffected by changes in Bank Rate. And many had few, if any, savings on which to draw.”

In fact, Haldane even explained that the rate hike is a good when he wrote the following (emphasis mine):

“Rising inflation worsens the well-known ‘poverty premium’ the poorest in society already face in the higher costs they pay for the everyday goods and services they buy. Inflation further squeezes the dough in the doughnut. The rise in inflation through this year has already generated such a squeeze on many households’ purchasing power. This is not something the Bank, or anyone else, should wish to see continuing for years to come – hence the nudge up in interest rates.”

Some risk aversion to start the week

Europe started the new trading week where it left off since the major European equity indices got hit by another wave of risk aversion that sent most of them into negative territory.

The risk-off vibes actually started in the Asian session, thanks to lingering worries over progress in U.S. tax reforms, market analyst say.

And that theme continued to play out during the morning London session. Although poor earnings reports for European companies were also cited by some market analysts.

  • The pan-European FTSEurofirst 300 was down by 0.37% 1,522.95
  • Germany’s DAX was down by 0.52% to 13,060.50
  • The blue-chip Euro Stoxx 50 was down by 0.34% to 3,581.00

The risk-off vibes also caused U.S. equity futures to dip, hinting that the risk-off vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.15% to 2,575.62
  • Nasdaq futures were down by 0.13% to 6,301.00

Global bond yields fall

Another sign that risk aversion was the dominant sentiment during today’s morning London session was strong demand for bonds which caused global bond yields to fall.

  • German 10-year bond yield down by 5.83% to 0.388%
  • French 10-year bond yield down by 2.18% to 0.767%
  • U.K. 10-year bond yield down by 2.61% to 1.306%
  • U.S. 10-year bond yield down by 1.18% to 2.372%

Major Market Mover(s):


The risk-off vibes meant a contest between the Swissy and the yen on which currency will be the safe-haven currency of choice. And as it turns out, that ended up being the Swissy since the Swissy edged out the yen to emerge as the top-performing currency of the morning London session, as well as the second best-performing currency of the day (so far).

There were no clear reasons as to why the Swissy was able to outperform the yen, however. In fact, bond yields fell hard during the session, which should have given the yen an extra boost.

Maybe SNB officials were not paying attention or were not in the mood to intervene? I’m just (half) kidding of course.

USD/CHF was down by 28 pips (-0.28%) to 0.9941, AUD/CHF was down by 37 pips (-0.49%) to 0.7597, CAD/CHF was down by 29 pips (-0.37%) to 0.7824

USD/JPY was down by 15 pips (-0.13%) to 113.30, AUD/JPY was down by 29 pips (-0.33%) to 86.59, CAD/JPY was down by 19 pips (-0.21%) to 89.18


The risk-off vibes may have spurred demand for the safe-havens yen and Swissy, but the same risk-off vibes sapped demand for the higher-yielders, with the Kiwi getting the brunt of it since the Kiwi ended up as the worst-performing currency of the morning London session.

NZD/USD was down by 18 pips (-0.26%) to 0.6907, NZD/JPY was down by 31 pips (-0.40%) to 78.26, NZD/CHF was down by 38 pips (-0.55%) to 0.6866

Watch Out For:

  • 5:45 pm GMT: BOJ Shogun Kuroda will speak
  • 7:00 pm GMT: U.S. Federal budget balance (-$50.0B expected, $8.0B previous)
  • Remembrance Day holiday in Canada today