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The pound outpaced all its peers to come out as the top-performing currency of the morning London session, apparently as a reaction to the latest U.K. retail sales report.

The returning risk-on vibes, meanwhile, soured sentiment for the safe-haven Swissy, so much so that the Swissy was the worst-performing currency of the session.

  • French jobless rate: 9.7% vs. steady at 9.5% expected
  • U.K. retail sales m/m: 0.3% vs. 0.2% expected, -0.7% previous
  • U.K. retail sales y/y: -0.3% vs. -0.5% expected, 1.3% previous
  • Euro Zone final HICP y/y: unchanged at 1.4% as expected
  • Euro Zone final core HICP y/y: unchanged at 0.9% as expected

Major Events/Reports

U.K. retail sales report

According to the latest retail sales report from the Office for National Statistics, retail sales volume in the U.K. expanded by 0.3% in October, beating expectations for a slightly weaker 0.2% increase.

Another positive revelation is that the September’s 0.8% contraction was revised to show a less disappointing 0.7% contraction.

However, the year-on-year reading for retail sales volume printed a 0.3% decline, which is the first negative annual reading in four years.

But on a more upbeat note, retail sales volume was expected to print a more painful year-on-year decline of 0.5%.

Another upbeat detail is that the upgraded reading for September means that retail sales for all of Q3 was 0.7% higher compared to retail sales in Q2.

This is a tick higher than the original estimate of 0.6% and will likely lead to an upgraded reading for the U.K.’s Q3 GDP growth.

ECB’s Mersch speaks

ECB Board Member Yves Mersch was interviewed by CNBC during the session. And Mersch said some rather hawkish things.

To begin with, Mersch heavily implied that the ECB no longer has an easing bias on its QE program when he said the following:

“I do not expect that the market would be right to anticipate a further increase of asset purchases at the end of our program.”

Mersch also had this to say on the Euro Zone’s economic outlook:

“I think no one would be overly surprised if we would again slightly revised upwards our projections for growth.”

And with regard to the ECB’s percieved weakness in inflation, Mersch said that it “now looks it would be less pronounced and less steep than what might have been feared at one moment.”

However, Mersch also hinted that the ECB is wary of tightening its monetary policy too soon when he said that:

“This path (of monetary tightening) is still needing a certain amount, a certain amplitude of monetary accommodation”

Risk appetite returns to Europe

After several consecutive days of risk aversion, Europe finally showed signs of risk-taking that sent the major European equity indices broadly higher.

Market analysts say today’s bout of risk-taking was just a recovery rally, with basic materials, technology companies, and financial services companies in demand.

  • The pan-European FTSEurofirst 300 was up by 0.61% 1,512.80
  • Germany’s DAX was up by 0.45% to 13,034.25
  • The blue-chip Euro Stoxx 50 was up by 0.48% to 3,566.50

The risk-friendly environment in Europe also supported U.S. equity futures.

  • S&P 500 futures were up by 0.34% to 2,573.62
  • Nasdaq futures were up by 0.46% to 6,294.88

Global bond yields recover

Another sign of the recovering sentiment was dampened demand for bonds, which allowed global bond yields to recover.

  • German 10-year bond yield up by 0.79% to 0.382%
  • French 10-year bond yield up by 0.15% to 0.734%
  • U.K. 10-year bond yield up by 1.63% to 1.307%
  • U.S. 10-year bond yield up by 0.97% to 2.358%
  • Canadian 10-year bond yield up by 1.36% to 1.941%

Major Market Mover(s):


The pound already found demand ahead of the morning London session, likely because of rumors that Theresa May may pony up as much as £20 billion so that negotiations on a post-Brexit trade deal can begin.

However, the pound found even more buyers after the U.K.’s retail sales report was released.

GBP/USD was up by 48 pips (+0.37%) to 1.3194, GBP/CHF was up by 80 pips (+0.62%) to 1.3107, GBP/NZD was up by 115 pips (+0.60%) to 1.9296


The safe-haven Swissy had a tough time during the morning London session and ended up at the bottom of the forex heap, likely because of the returning risk-on vibes.

USD/CHF was up by 24 pips (+0.24%) to 0.9933, AUD/CHF was up by 19 pips (+0.25%) to 0.7534, EUR/CHF was up by 18 pips (+0.16%) to 1.1683

Watch Out For:

  • 1:30 pm GMT: Canadian manufacturing sales (-0.5% expected, 1.6% previous)
  • 1:30 pm GMT: U.S. initial jobless claims (235K expected, 239K previous) and Philadelphia Fed Survey (24.6 expected, 27.9 previous)
  • 2:00 pm GMT: BOE Guv’nah Carney is scheduled to speak
  • 2:15 pm GMT: U.S. industrial production (0.5% expected, 0.3% previous)
  • 2:15 pm GMT: U.S. capacity utilization (76.3% expected, 76.0% previous)
  • 3:00 pm GMT: NAHB builders survey (67.0 expected, 68.0 previous)
  • 3:30 pm GMT: BOC review will be released
  • 8:45 pm GMT: U.S. Fed Governor Lael Brainard will speak
  • 9:30 pm GMT: Business NZ manufacturing index (57.5 previous)
  • 9:30 pm GMT: New Zealand’s quarterly PPI input (1.2% expected, 1.4% previous)
  • 9:30 pm GMT: New Zealand’s quarterly PPI output (1.4% expected, 1.3% previous)