- German final HICP m/m: unchanged at 1.0% as expected
- German final HICP y/y: unchanged at 1.7% as expected
- U.K. claimant count change: -10.1K vs. 5.0K expected, 1.3K previous
- U.K. jobless rate: steady at 4.8% as expected
- U.K. average earning index (no bonus): 2.7% vs. 2.6% expected, 2.6% previous
- U.K. average earning index (w/ bonus): 2.8% vs. 2.6% expected, 2.6% previous
- Euro Zone final HICP y/y: unchanged at 1.1% as expected
- Euro Zone final core HICP y/y: unchanged at 0.9% as expected
- U.S. CPI coming up
- BOC rate statement and presser for later
- Fed Head Yellen will speak later
The risk-off vibes apparently fueled demand for the safe-haven Swissy while the slump in oil prices dragged the Loonie lower. All the while, the pound steadily gave back its gains from yesterday’s super rally.
U.K. jobs report – According to the ONS, the U.K.’s jobless rate held steady at 4.8% during the three months to November. This is the lowest reading since the three months to September 2005. However, the steady reading was widely expected.
There were positive surprises, though. First of all, the number of people claiming unemployment-related benefits in December actually declined by 10.1K. Moreover This is good news because the consensus was that the number of claimants would increase by 5.0K. In addition, there were only 1.3K claimants in November, which is fewer than the original estimate of 2.4K.
Moving on, average earning also accelerated by 2.8%, beating expectations that it would match the previous 2.6% increase. And even if bonuses are stripped, average earnings still grew by 2.7%, which is also faster than the expected steady 2.6% consensus.
Oil slumps, other commodities mixed – Commodities had a mixed performance during the session, with precious metals flat, base metals mixed but mostly down, and oil down hard.
Precious metals were roughly flat, as mentioned earlier.
- Gold was down by 0.01% to $1,212.75 per troy ounce
- Silver was down by 0.09% to $17.133 per troy ounce
Base metals, meanwhile, were mixed but mostly in the green.
- Copper was down by 0.46% to $2.613 per pound
- Nickel was up by 0.49% to $10,200.00 per dry metric ton
- Aluminum was up by 0.18% to $1,800.75 per dry metric ton
As for oil benchmarks, they were down pretty hardest.
- U.S. crude oil was down by 1.60% to $51.64 per barrel
- Brent crude oil was down by 1.39% to $54.70 per barrel
Precious metals were roughly flat, probably because the safe-haven demand due to the risk-off mood was being offset by the stronger Greenback. For reference, the U.S. dollar index is up by 0.44% to 100.70 for the day.
Base metals, meanwhile, were mixed but mostly up, likely because of profit-taking by the shorts after plunging hard, as noted in yesterday’s London session recap. Although market analysts also point to news such as the Philippines canceling permits for four mining projects, which likely gave nickel a bullish boost, given that one of them is a nickel mining project and the Philippines happens to be the biggest supplier of nickel.
As for the slump in oil prices, that was blamed by market analysts on worries that U.S. oil output would rise, thereby undermining the effectiveness of OPEC’s oil cut deal.
Risk aversion in Europe – After a somewhat mixed day yesterday due to Theresa May’s Brexit speech, risk aversion was clearly back in Europe today, since many European equity indices started in positive territory, but were mostly in the red by the end of the session.
- The pan-European FTSEurofirst 300 down by 0.22% to 1,427.75
- The blue-chup Euro Stoxx 50 was down by 0.37% to 3,276.50
- Germany’s DAX was down by 0.02% to 11,539.00
Some market analysts point to educational publisher Pearson and the 27% drop in its share price as souring overall risk sentiment. Other market analysts point to worries over Trump, especially his planned trade policies, as the main reason for the risk-off vibes.
Major Market Movers:
GBP – The pound extended its earlier slide during the morning London session. And as a result, it ended up as the weakest currency of them all. Heck, not even the upbeat jobs report could prop it up. Anyhow, there was no clear reason for this broad-based weakness, although profit-taking by the bulls after yesterday’s super rally is very likely.
GBP/USD was down by 57 pips (-0.47%) to 1.2269, GBP/JPY was down by 41 pips (-0.29%) to 139.27, GBP/CAD was down by 24 pips (-0.15%) to 1.6089
CAD – The Loonie was the second worst performing currency of the session, very likely because of the slump in oil prices. However, it is also possible that market players were wary of loading up on the yen ahead of the BOC statement and presser for later.
USD/CAD was up by 41 pips (+0.32%) to 1.3111, AUD/CAD was up by 35 pips (+0.36%) to 0.9899, NZD/CAD was up by 25 pips (+0.26%) to 0.9426
CHF – The risk-off vibes likely generated some safe-haven demand for the Swissy. However, there was a sudden rush of sellers near the end of the session. There was no clear reason why, but I’m willing to bet that the sneaky SNB was likely weakening the Swissy. Still, the Swissy managed to close out the session with some gains to end up as the one currency to rule them all.
USD/CHF was down by 4 pips (-0.05%) to 1.0038 with 1.0013 as session low, CAD/CHF was down by 27 pips (-0.35%) to 0.7655 with 0.7643 as session low, GBP/CHF was down by 61 pips (-0./50%) to 1.2320 with 1.2294 as session low
- 1:30 pm GMT: Headline (0.3% expected, 0.2% previous) and core (0.2% expected, same as previous) readings for U.S. CPI
- 2:15 pm GMT: U.S. capacity utilization (75.4% expected, 75.0% previous) and industrial production (0.6% expected, -0.4% previous)
- 3:00 pm GMT: NAHB U.S. builders survey (69 expected, 70 previous)
- 3:00 pm GMT: BOC interest rate decision (steady at 0.50% expected) and Quarterly Monetary Policy Report
- 4:00 pm GMT: Minneapolis Fed President Neel Kashkari has a speech
- 4:15 pm GMT: BOC press conference
- 7:00 pm GMT: U.S. Fed’s Beige book will be released
- 8:00 pm GMT: Fed Head Janet Yellen has a speech
- 9:30 pm GMT: Business NZ manufacturing index (54.4 previous)
- 9:45 pm GMT: New Zealand’s building consents (2.6% previous)
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!