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London Session Recap: EUR & CHF in Demand Again, GBP Found Support, CAD Suffered

Lots of fun themes were playing out during the session, with the euro and the Swissy getting buyers right from the get-go. Meanwhile, the pound finally found support after getting whupped during the earlier Asian session. As for the Loonie, it ended up as the worst-performing currency of the session when the Greenback somehow edged out a win near the end.

  • UBS Consumption indicator: 1.48 vs. 1.44 previous
  • German retail sales m/m: -0.2% vs. 0.4% expected, 0.2% previous
  • German unemployment change: -9K vs. -14K expected, -15K previous
  • Credit Suisse economic expectations: 30.8 vs. 22.2 previous
  • U.K. net lending to individuals m/m: £4.3B vs. £4.5B expected, £4.7B previous
  • U.K. mortgage approvals: 64.6K vs. 66.0K expected, 66.8K previous
  • Euro Zone flash HICP y/y: 1.4% vs. 1.5% expected, 1.9% previous
  • Euro Zone flash core HICP y/y: 0.9% vs. 1.0% expected, 1.2% previous
  • Jobless rate in the Euro Zone: 9.3% vs. steady at 9.4% expected

Major Events/Reports

Month-end flows?

It’s the last trading day of the month, so some month-end capital flows are to expected as hedge funds, mutual funds, pension funds, and other large players rebalance their portfolios and/or prepare to make cash distributions. Also, month-end flows help to explain some of the rather wonky price action during the session.

Mixed Euro Zone Data

A slew of economic reports for the Euro Zone and its Member States were released during the session, and results were mixed.

Focusing only on the higher-end reports for the Euro Zone as a whole, the flash estimate for HICP in May came in a 1.4%, missing expectations for a 1.5% increase, as well as being slower than the previous month’s +1.9%. In addition, this is the poorest reading in five months. Also, the increase in headline HICP is still being driven mainly by higher energy prices.

Meanwhile, the core reading came in at +0.09%, which is also a miss from the +1.0% consensus, as well as slower than the previous month’s 1.2% increase. More importantly, both the headline and core readings are veering away from the ECB’s staff forecast of 1.7% and 1.1% respectively.

Moving on, the April jobless rate for the Euro Zone as a whole came in at 9.3%, beating expectations that it would hold steady at 9.4%. Moreover, this is the best reading since March 2009, which is great. Even better, April’s reading of 9.3% is already better than the ECB’s forecast of 9.4% for 2017.

Oil Takes a Plunge

Commodities were mixed during the session, but oil was rather noteworthy because it plunged pretty hard.

  • U.S. WTI crude oil was down by 2.48% to $48.43 per barrel
  • Brent crude oil was down by 2.62% to $50.87 per barrel

Market analysts couldn’t pinpoint a direct catalyst for oil’s plunge, so they pointed to persistent worries that the rise in U.S. oil output would offset the positive effects of the OPEC oil cut deal extension.

Risk-talking Europe

Risk appetite finally made a comeback and banished risk aversion during today’s morning London session.

  • The pan-European FTSEurofirst 300 was up by 0.26% to 1,537.58
  • Germany’s DAX was up by 0.66% to 12,682.25
  • The blue-chip Euro Stoxx 50 was up by 0.60% to 3,579.00

Even U.S. equity futures were feeling the bearish vibes.

  • S&P 500 futures were up by 0.13% to 2,414.00
  • Nasdaq futures were up by 0.28% to 5,808.12

Major Market Mover(s):

EUR & CHF

The euro just shrugged off the mixed economic reports during the session and ended up a net winner. The safe-haven Swissy, meanwhile, initially had a hard time but ultimately won out against the euro to come out on top as the best-performing currency of the session, even though risk-taking prevailed.

Watch Out For:

  • 12:30 pm GMT: Canada’s monthly GDP (0.2% expected, 0.0% previous)
  • 1:45 pm GMT: Chicago PMI (57.0 expected, 58.3 previous)
  • 2:00 pm GMT: U.S. pending home sales (0.5% expected, -0.8% previous)
  • 6:00 pm GMT: U.S. Fed’s “Beige Book” will be released

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