Article Highlights

  • French PPI m/m: 0.8%, same as previous
  • French PPI y/y: -0.2% vs. -0.9% previous
  • U.K. public sector net borrowing: £12.2B vs. £11.5B expected, £4.3B previous
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U.S. bond yields fell during the morning London session, dragging the Greenback with it. Returning risk aversion, meanwhile, apparently weighed down on the higher-yielding Kiwi.

Major Events/Reports:

Risk aversion returns – Risk appetite got banished once more, as risk aversion reemerged to send European equities lower.

  • The pan-European FTSEurofirst 300 was down by 0.38% to 1,424.16
  • The blue-chip Euro Stoxx 50 was down by 0.50% to 3,272.50
  • Germany’s DAX was down by 0.10% to 11,454.50
  • The U.K.’s FTSE 100 was down by 0.22% to 7,032.30

U.S. equity futures were about flat, but were printing modest losses by the end of the session.

  • S&P 500 futures were down by 0.08% to 2,264.75
  • Nasdaq futures were down by 0.09% to 4,951.62

Precious metals, which are considered as traditional safe-havens, were also in demand, with gold up by 0.29% to $1,136.90 per dry metric ton.

Market analysts blamed the risk-off vibes in Europe to renewed concerns over Italian banks, with Monte dei Paschi, Italy’s most troubled bank, once again in focus.

Commodities advance – Gold was in the green, as I noted earlier. However, gold was not the only one, since commodities staged a moderate yet broad-based rally during the session.

Base metals were also in positive territory.

  • Copper was up by 0.14% to $2.506 per pound
  • Tin was up by 0.14% to $20,960.00 per dry metric ton

And the same can be said for oil benchmarks.

  • U.S. crude oil was up by 0.54% to $53.59 per barrel
  • Brent crude oil was up by 0.43% to $55.59 per barrel

The broad-based rally was likely because of the Greenback’s slide, which makes commodities priced in Greenbacks relatively cheaper. For reference, the USD index was down by 0.29% to 102.97 for the day. With regard to oil, however, market analysts also pointed to speculation that U.S. oil inventories may report a draw later.

Bond yields fall – Another sign of risk aversion was the fall in bond yields during the session. Although market analysts also pointed to the possibility of profit-taking before the end of the year.

  • French 10-year bond yield down by 3.44% to 0.701%
  • German 10-year bond yield down by 6.27% to 0.254%
  • Italian 10-year bond yield down by 0.76% to 1.833%
  • U.K. 10-year bond yield down by 0.28% to 1.405%
  • U.S. 10-year bond yield down by 0.51% to 2.555%

Major Market Movers:

USD – Falling U.S. bond yields likely exerted some bearish pressure on the Greenback, according to market analysts. The bearish pressure was apparently strong enough that the Greenback ended up one of the weakest currencies of the session, despite the prevalence of risk aversion.

AUD/USD was up by 13 pips (+0.18%) to 0.7264, GBP/USD was up by 5 pips (+0.04%) to 1.2366, EUR/USD was up by 12 pips (+0.12%) to 1.0418

CAD – Despite the higher oil prices during the morning London session, the Loonie ended up as the second weakest currency. Unfortunately, there was no apparent reason for the Loonie’s weakness.

USD/CAD was up by 7 pips (+0.05%) to 1.3372, CAD/JPY was down by 27 pips (-0.32%) to 87.70, CAD/CHF was down by 15 pips (-0.20%) to 0.7672

NZD – The Kiwi was the weakest currency of the session, probably because the risk-off vibes dampened demand for the higher-yielding currency.

NZD/USD was down by 6 pips (-0.08%) to 0.6918, NZD/CHF was down by 17 pips (-0.24%) to 0.7099, NZD/CAD was down by 5 pips (-0.06%) to 0.9251

JPY – The yen was the main benefactor of the risk-off vibes, as well as the Greenback’s weakness, during the session.

USD/JPY was down by 33 pips (-0.27%) to 117.28, GBP/JPY was down by 37 pips (-0.26%) to 145.00, NZD/JPY was down by 29 pips (-0.36%) to 81.13

Watch Out For:

  • 2:00 pm GMT: SNB’s quarterly bulletin will be released
  • 3:00 pm GMT: Euro Zone consumer sentiment (-6.0 expected, -6.1 previous)
  • 3:00 pm GMT: U.S. existing home sales (5.5M expected, 5.6 previous)
  • 3:30 pm GMT: U.S. crude oil inventories (-2.4M expected, -2.6M previous)
  • 9:45 pm GMT: New Zealand’s current account (-$4.89B expected, -$0.95B previous)
  • 9:45 pm GMT: New Zealand’s GDP (0.8% vs. 0.9% previous)

See also:

Asian Session Recap

U.S. Session Recap

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