Japanese Yen and Swiss Franc Higher as Risk Aversion Dominates the Markets

Market Reviews

Swiss franc and Japanese yen are trading as the strongest ones on risk aversion. Australian dollar is the weakest one for today, euro follows as the second weakest. The British pound is trading mixed, as UK Prime Minister Theresa May survived another day with no leadership challenge triggered yet. German 10 year yield is down -0.021 at 0.355. Italian 10 year yield is up 0.004 at 3.605. Spread widens to 325.

On stock markets, major European indices are trading broadly lower and US futures also point to lower open. FTSE lost 0.49%, DAX fell 1.17%, CAC dropped 1.13%. Earlier in Asia, Nikkei dropped 1.09%, Hong Kong HSI fell 2.02%, China Shanghai SSE lost 2.13%, Singapore Strait Times dropped 1.24%.

Bank of England Governor Mark Carney emphasized that a no-deal Brexit is not a financial crisis round two where central banks take center stage, but this is a real economy shock. Carney acknowledged that “implied volatility in sterling is very high right now, much higher than it is for other major currencies” for “political discussions” with “importance” for the short to medium term outlook. And, “it will continue to be volatile for the next month at least”.

Today’s data showed, that UK CBI trends total orders rose to 10 in November, much better than expectation of -5. German PPI rose 0.3% mom, 3.3% yoy in October, matched expectations. Swiss trade surplus widened to CHF 3.75B in October. US housing starts dropped to 1.23M annualized rate in October. Building permits dropped to 1.26M. Both matched expectations.