Article Highlights

  • German PPI m/m: 0.4% as expected vs. 0.3% previous
  • German PPI y/y: 1.0% as expected vs. 0.1% previous
  • U.K. retail sales m/m: -1.9% vs. -0.1% expected, -0.1% previous
  • U.K. retail sales y/y: 4.3% vs. 7.2% expected, 5.7% previous
  • Canada’s retail sales and CPI reports coming up
  • The Donald will give his inauguration speech later
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Price action on most pairs was rather choppy during today’s morning London session, as traders waited for Trump’s inauguration. However, the Greenback was clearly in recovery mode across all pairs after yesterday’s slide. Meanwhile, the Kiwi was broadly under bearish pressure.

Major Events/Reports:

Poor U.K. retail sales – The U.K.’s retail sales report for the December 2016 period was released earlier. And, well, it was pretty disappointing.

Headline retail sales volume fell by 1.9% month-on-month, a harder drop than the expected 0.1% stumble. Moreover, this is the worst reading since April 2012. Not only that, the reading for November was downgraded from a 0.2% increase to a 0.1% dip.

Year-on-year, this translates to a 4.3% increase, a significantly slower expansion when compared to the expected 7.2% increase. In addition, the annual reading is also weaker than November’s +5.7%. This also means that the annual reading has been weakening for two straight months running.

On a more upbeat note, the retail sales report admits that the reporting period does not yet include the buying frenzy known as “Black Friday”. This means that the reading is likely subject to an upward revision.

Oil rises further, other commodities fall further – Commodities had a repeat performance of yesterday’s price action, with oil rising as other commodities fell.

Precious metals were in the red again.

  • Gold was down by 0.05% to $1,200.95 per troy ounce
  • Silver was down by 0.20% to $16.968 per troy ounce

Base metals, meanwhile, were still broadly leaking red.

  • Copper was down by 0.40% to $2.600 per pound
  • Nickel was up by 1.19% to $9,795.00 per dry metric ton

And as mentioned earlier, oil benchmarks were still going against the tide.

  • U.S. crude oil was down by 1.40% to $52.85 per barrel
  • Brent crude oil was down by 1.55% to $55.00 per barrel

Market analysts blamed the poor performance by commodities, particularly metals, on the Greenback’s recovery. And as it stands now, the U.S. dollar index is up by 0.23% to 101.33 after being in the red earlier.

Oil’s resilience, meanwhile, was attributed by market analysts to speculation that a weekend OPEC meeting in Vienna would show that oil producers were complying with the OPEC oil cut deal.

Risk appetite returning? – Most of the major European equity indices opened in the red. However, they started clawing their way higher during the course of the session to end the session in the green. Most European equity indices are off their highs after a burst of selling pressure near the end, though.

  • The pan-European FTSEurofirst 300 was up by 0.05% to 1,432.95
  • The blue-chup Euro Stoxx 50 was up by 0.39% to 3,301.50
  • Germany’s DAX was up by 0.11% to 11,607.50
  • The U.K.’s FTSE 100 was up by 0.02% to 7,209.30

U.S. equity futures also got a bullish boost.

  • S&P 500 futures were slightly up by 0.20% to 2,266.00
  • Nasdaq futures were slightly up by 0.26% to 5,066.88

Market analysts say that the modest signs of risk-taking were due to cautious optimism ahead of Trump’s inauguration. Although market analysts also point out that the moderately risk-friendly environment was soured a bit by poor performance from the mining sector.

Major Market Movers:

USD – The Greenback staged a broad-based recovery during the morning London session. Other than profit-taking after yesterday’s slide and before Trump’s inauguration speech, there was no clear reason for the recovery.

USD/JPY was up by 45 pips (+0.40%) to 115.24, USD/CAD was up by 69 pips (+0.52%) to 1.3369, USD/CHF was up by 35 pips (+0.35%) to 1.0090

NZD – The higher-yielding Kiwi was under bearish pressure throughout the session, despite the modest risk-on vibes. There was no clear reason for the Kiwi’s weakness. However, U.S. dollar dynamics was likely in play, given that it’s fellow higher-yielding comdoll, the Aussie, had a more mixed performance during the session.

NZD/USD was down by 48 pips (-0.67%) to 0.7140, NZD/CHF was down by 23 pips (-0.32%) to 0.7205, NZD/JPY was down by 23 pips (-0.29%) to 82.28

Watch Out For:

  • 1:30 pm GMT: Headline (0.0% expected, -0.4% previous) and core (0.1% expected, 1.4% previous) readings for Canada’s CPI
  • 1:30 pm GMT: Headline (0.5% expected, 1.1% previous) and core (0.2% expected, -0.5% previous) readings for Canada’s retail sales
  • 2:00 pm GMT: Philadelphia Fed President Patrick Harker has a speech
  • 5:00 pm GMT: The Donald’s inauguration speech

See also:

Asian Session Recap 
U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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