Article Highlights

  • German factory orders m/m: 4.9% vs. 0.6% expected, -0.6% previous
  • German factory orders y/y: 6.3% vs. 1.6% expected, 2.6% previous
  • Swiss CPI m/m: -0.2% vs. -0.1% expected, 0.1% previous
  • Swiss CPI y/y: -0.3% vs. -0.2% expected, -0.2% previous
  • Euro Zone Q3 final GDP q/q: unchanged at 0.3% as expected
  • Euro Zone Q3 final GDP y/y: unchanged at 1.7% as expected
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Today’s morning London session was rather calm, with many currency pairs trading sideways. The risk-on vibes likely sent buyers towards the Aussie, though, while the euro got a bearish injection near the end of the session.

Major Events/Reports:

Oil tumbles – The oil rally fueled by the successful OPEC oil deal showed signs of ending today, since oil benchmarks were leaking red.

  • U.S. crude oil was down by 1.37% to $51.08 per barrel
  • Brent crude oil was down by 0.98% to $54.41 per barrel

Market analysts say the drop in oil price during the session was due to reports that Russia and many OPEC members ramped up their oil production. Quite naturally, this eroded optimism over OPEC’s deal to cut oil output.

Another round of risk-taking – There were signs of another bout of risk-taking in Europe, albeit not as strong as yesterday. And thanks to the risk-on vibes, most of the major European equity indices ended the session with moderate gains.

  • The pan-European FTSEurofirst 300 was up by 0.42% to 1,352.71
  • The blue-chip Euro Stoxx 50 was up by 0.61% to 3,072.50
  • Germany’s DAX was up by 0.22% to 10,708.00

U.S. equity futures were rather flat, but leaning towards the green.

  • S&P 500 futures were up by 0.06% to 2,205.50
  • Nasdaq futures were up by 0.11% to 4,786.12

According to market analysts, Italian banking shares were rallying, which improved overall risk sentiment. And the rally in Italian banking shares was due to expectations that an election won’t come in early 2017, which would allow the government to address the beleaguered Italian banks. However, European equity indices showed signs of retreating when reports about the possibility of early Italian elections emerged.

Early Italian elections? – Near the end of the session, reports citing Italian Minister of the Interior Angelino Alfano began making the rounds. According to these reports, Alfano said the following after meeting with Renzi: “I forecast there will be the will to go to elections in February.” This obviously goes against the prevailing belief that there won’t be an election in early 2017.

 Major Market Movers:

AUD – Price action was limited, but the higher-yielding Aussie did end up as the top dog of the morning London session, likely because of the risk-on mood.

AUD/USD was up by 10 pips (+0.12%) to 0.7454, AUD/CHF was up by 36 pips (+0.49%) to 0.7525, AUD/NZD was up by 25 pips (+0.25%) to 1.0460

EUR – Like most currency pairs, euro pairs were well-behaved for most of the session. However, the euro abruptly got trounced by sellers near the end. There weren’t really any major economic catalysts, but the euro’s drop did coincide with the spread of reports about the possibility of early Italian elections.

EUR/USD was down by 28 pips (-0.27%) to 1.07338, EUR/CAD was down by 35 pips (-0.26%) to 1.4233, EUR/AUD was down by 57 pips (-0.40%) to 1.4397

Watch Out For:

  • 1:30 pm GMT: Canada’s trade balance (-$1.70B expected, -$4.08B previous)
  • 1:30 pm GMT: U.S. trade balance (-$42.0B expected, -$36.4B previous)
  • 1:30 pm GMT: Final U.S. non-farm productivity (upgrade from 3.1% to 3.3% expected)
  • 1:30 pm GMT: U.S. factory orders (2.6% expected, 0.3% previous)
  • 3:00 pm GMT: Ivey’s Canadian PMI (60.0 expected, 59.7 previous)
  • 10:00 pm GMT: RBNZ Governor Graeme Wheeler will testify before the Finance Select Committee
  • Dairy auction currently underway (+4.5% previous); auction usually ends at around 2:00 pm GMT

See also:

Asian Session Recap

U.S. Session Recap

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