Article Highlights

  • German ZEW economic sentiment: 6.2 vs. 4.0 expected. 0.5 previous
  • German ZEW current conditions: 59.5 vs. 55.5 expected, 55.1 previous
  • Euro Zone ZEW economic sentiment: 12.3 vs. 6.2 expected, 5.4 previous
  • U.S. NFIB small business index: 94.1 vs. 95.2 expected, 94.4 previous
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The forex calendar for today’s morning London session was a bit light, so forex traders turned mainly to risk sentiment for cues. The risk-on mood didn’t seem to dampen demand for the safe-haven yen and the Greenback, though.

Major Events/Reports:

Another risk-on session in Europe – Most of the major European equity indices opened slightly lower, but slowly climbed higher into positive territory.

  • The pan-European FTSEurofirst 300 was up by 0.24% to 1,353.53
  • The blue-chip Euro Stoxx 50 was up by 0.44% to 3,050.00
  • Germany’s DAX was up by 0.56% to 10,683.25
  • The U.K.’s FTSE 100 was up 0.38% to 7,124.70

U.S. equity futures were not doing too well, however.

  • S&P 500 futures were down by 0.28% to 2,153.00
  • Nasdaq futures were down by 0.12% to 4,887.38

Aside from risk sentiment spillover from the earlier Asian session, market analysts also pointed to strong demand for European luxury shares after positive data got released. The risk-on mood may not carry over into the upcoming U.S. session, though, since U.S. equity futures were in the red, as I noted earlier.

Commodities get a pounding – Commodities were broadly in retreat during today’s morning London session after yesterday’s bullish party.

Precious metals got whupped:

  • Gold was down by 0.32% to $1,256.35 per troy ounce
  • Silver was down by 0.41% to $17.587 per troy ounce

Base metals were mostly kicked lower:

  • Copper was down by 0.57% to $2.185 per pound
  • Nickel was down by 0.74% to $10,455.00 per dry metric ton

Oil benchmarks got smacked pretty hard:

  • U.S. crude oil was down by 1.34% to $50.66 per barrel
  • Brent crude oil was down by 1.22% to $52.49 per barrel

The broad-based commodities slide was very likely due to the Greenback’s overall strength, with the U.S. dollar index up by 0.57% to 97.46 for the day. For the newbies out there, a stronger U.S. dollar means that globally-traded commodities that are usually denominated in U.S. dollars are less attractive to buy.

As usual, there were reports for each commodity. The slump in oil prices during the session, for example, was due to concerns that OPEC’s plan to cut oil production may not be able to offset the oil glut, according to market analysts.

BOE Saunders and Kashyap speak – BOE MPC member Michael Saunders testified before the Treasury Select Committee earlier. And Saunders said that “Given the scale and persistence of the UK’s current account deficit, I would not be surprised if sterling falls further, but I am fairly agnostic as to whether any further depreciation is likely.”

BOE FPC member Anil Kashyap also testified, and he warned that the pound could fall further of the U.K. has a “hard Brexit.”

Despite the bearish rhetoric on the pound, most pound pairs were trading sideways, so their statements didn’t seem to have a lot of impact, but still worth noting.

Reuters BOJ survey – Earlier today, Reuters released the results of a survey taken between September 30 and October 10. The survey asked market analysts what they expect from the BOJ.

And according to Reuters, the BOJ “is expected to wait until next year before easing policy further unless any sharp spikes in the yen undermine the economy significantly in the meantime.”

Also according to Reuters, “About 70 percent of the analysts who answered an extra question said the BOJ would add more stimulus at its January meeting or later, while a handful of analysts predicted the central bank would ease further at its Oct. 30-Nov. 1 meeting when it releases its long-term growth and inflation outlook.”

Major Market Movers:

JPY – The yen just shrugged off the risk-on vibes in Europe, even though there were no catalysts. However, it’s possible that yen bulls were positioning themselves in the expectation that risk aversion will dominate the upcoming U.S. session. Although it’s also possible that the Reuters poll stoked demand for the yen since that came out at roughly the same time that the yen started advancing.

USD/JPY was down by 12 pips (-0.12%) to 103.77, EUR/JPY was down by 53 pips (-0.46%) to 114.96, CHF/JPY was down by 55 pips (-0.53%) to 105.11

USD – The Greenback was the second-strongest currency after the mighty yen. There were no apparent catalysts, though. The Greenback has been advancing against many of its peers since Monday. Perhaps bulls are getting back into the fray after getting shaken out in the aftermath of last week’s NFP report? Expectations for a December rate hike did increase after all.

EUR/USD was down by 39 pips (-0.36%) to 1.1077, USD/CAD was up by 27 pips (+0.20%) to 1.3219, USD/CHF was up by 29 pips (+0.30%) to 0.9872

EUR – The rise in European equities apparently damaged demand for the euro the most. The morning London session was just so unkind to the euro that it ended up as the worst-performing currency of them all.

EUR/AUD was down by 36 pips (-0.25%) to 1.4674, EUR/CAD was down by 25 pips (-01.7%) to 1.4640, EUR/NZD was down by 57 pips (-0.37%) to 1.5659

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (190K expected, 182K previous)
  • 2:00 pm GMT: U.S. labor market conditions index (-0.7% previous)
  • 3:00 pm GMT: Minneapolis Fed President Neel Kashkari has a speech

See also:

Asian Session Forex Recap

U.S. Session Recap

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