Article Highlights

  • Swiss jobless rate: steady at 3.3% as expected
  • French manufacturing production m/m: 2.4% vs. 0.7% expected, -0.6% previous
  • French industrial production m/m: 2.2% vs .0.6% expected, -0.1% previous
  • U.S. NFIB small business index: 105.8 vs. 99.6 expected, 98.4 previous
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After sliding since yesterday, the Greenback staged a broad-based recovery on the back of rising U.S. bond yields during today’s morning London session. Meanwhile, the pound also staged its own recovery and the Kiwi got dumped.

Major Events/Reports:

Commodities rise but precious metals fall – Commodities had a reversal of fortune today. In yesterday’s morning London session, commodities fell while precious metals rose. But today, precious metals fell while the other commodities rose.

Base metals were in really high demand.

  • Copper was up by 2.66% to $2.606 per pound
  • Nickel was up by 1.40% to $10,522.50 per dry metric ton

Oil benchmarks, meanwhile, were doing well enough.

  • U.S. crude oil was up by 0.12% to $52.02 per barrel
  • Brent crude oil was up by 0.18% to $55.03 per barrel

Precious metals got whupped, however.

  • Gold was down by 0.13% to $1,183.40 per troy ounce
  • Silver was down by 0.27% to $16.638 per troy ounce

Market analyst say that the love for commodities, particularly base metals, was due to the net positive economic reports released by China earlier. The slide in precious metals, meanwhile, was likely due to the returning risk-on vibes during the morning London session, since they were in positive territory earlier.

Signs of recovering risk sentiment – European equity indices had a gloomy start. However, signs of optimism began to return as equity indices erased their losses and began printing gains.

  • The pan-European FTSEurofirst 300 was up by 0.13% to 1,439.60
  • The blue-chip Euro Stoxx 50 was up by 0.06% to 3,311.50
  • Germany’s DAX was up by 0.24% to 11,592.25
  • The U.K.’s FTSE 100 was up by 0.48% to 7,272.75

Market analysts blamed the earlier risk-off vibes to souring sentiment on Italian banks, which weighed down on the banking sector. However, the basic materials sector continued to climb higher during the course of the session, with the Thomson Reuters G7 basic materials sector index up by 0.21% by the end of the session. The intraday recovery in risk sentiment was therefore likely due to the commodities rally.

U.S. bond yields recover – Another sign of recovering risk sentiment was the bond sell-off. And thanks to the bond sell-off, U.S. bond yields rose across the board after plunging yesterday.

  • U.S. 1-year bond yield up by 0.30% to 0.813%
  • U.S. 3-year bond yield up by 0.77% to 1.465%
  • U.S. 5-year bond yield up by 0.43% to 1.889%
  • U.S. 10-year bond yield up by 0.45% to 2.387%

Major Market Movers:

USD – The rise in U.S. bond yields apparently allowed the Greenback to breathe a sigh of relief. For the newbies out there who are wondering how bond yields are related to the forex market, you can check out our school’s lesson on How Bond Yields Affect Currency Movements.

USD/JPY was up by 36 pips (+0.31%) to 116.19, USD/CHF was up by 29 pips (+0.29%) to 1.0155, USD/CAD was up by 27 pips (+0.20%) to 1.3249

GBP – The pound was also in recovery mode during the session, and even vied with the Greenback for domination. Other than profit-taking by the shorts, there was no clear reason for the sudden yet broad-based recovery.

GBP/JPY was up by 49 pips (+0.35%) to 141.18, GBP/AUD was up by 66 pips (+0.40%) to 1.6556, GBP/NZD was up by 113 pips (+0.66%) to 1.7436

NZD – If y’all can still recall what happened yesterday, the Kiwi strengthened despite the risk-off vibes and commodities rout. Today, the opposite happened since the Kiwi was the weakest currency of the session, even though risk sentiment recovered and commodities were in rally mode.

A probable explanation for the Kiwi’s wonky price action is that U.S. dollar dynamics are in play, particularly with regard to narrower interest rate differentials after the Fed hiked in December.

NZD/USD was down by 44 pips (-0.64%) to 0.6966, NZD/CAD was down by 41 pips (-0.44%) to 0.9230, NZD/CHF was down by 25 pips (-0.36%) to 0.7074

Watch Out For:

  • 1:15 pm GMT: Canadian housing starts (190K expected, 184K previous)
  • 1:30 pm GMT: Canadian building permits (-6.0% expected, 8.7% previous)
  • 3:00 pm GMT: U.S. wholesale inventories (0.9% expected, same as previous)
  • 3:00 pm GMT: JOLTS U.S. job openings (5.59M expected, 5.53M previous)

See also:

Asian Session Recap 
U.S. Session Recap

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