- SNB sight deposits: CHF 532,268M vs. CHF 531,397M previous
There wasn’t really anything major on the docket for today’s morning London session, so price action was choppy. However, forex traders apparently turned to the commodities rally for direction, since the Aussie and the Kiwi both got bid higher.
Oil retreats, other commodities advance – Most commodities were in rally mode during today’s morning London session. Oil was a clear exception, though.
Precious metals were in demand.
- Gold was up by 0.74% to $1,213.85 per troy ounce
- Silver was up by 0.92% to $17.188 per troy ounce
And the same can be said for base metals.
- Copper was up by 0.57% to $2.640 per pound
- Nickel was up by 0.68% to $9,752.50 per dry metric ton
Oil benchmarks were on the back foot, however.
- U.S. crude oil was down by 1.13% to $52.62 per barrel
- Brent crude oil was down by 0.79% to $55.05 per barrel
Market analysts attribute the broad-based commodities rally to the weaker Greenback. And for reference, the U.S. dollar index was down by 0.40% to 100.37 for the day when by the end of the session.
Aside from Greenback weakness, the risk-off vibes likely spurred demand for precious metals. After all, precious metals are considered as traditional safe-havens. Some market analysts also say that base metals got a boost from renewed hopes that Trump will push through with his infrastructure building program.
The slide in oil prices, meanwhile, was blamed by market analysts on another round of increase in U.S. oil rigs. This news apparently stoked concerns that the rise in U.S. oil output would likely cancel out (or worse) the effect of OPEC’s oil cut deal.
Risk-off start in Europe – Europe is starting the week with some risk aversion, since European equity indices were mostly in the red.
- The pan-European FTSEurofirst 300 was down by 0.22% to 1,429.22
- The blue-chup Euro Stoxx 50 was down by 0.31% to 3,287.50
- Germany’s DAX was down by 0.38% to 11,588.00
- The U.K.’s FTSE 100 was down by 0.47% to 7,164.50
The risk-off vibes also weighed down on U.S. equity futures.
- S&P 500 futures were down by 0.17% to 2,262.25
- Nasdaq futures were down by 0.21% to 5,047.62
Market analysts are blaming the risk-off vibes to jitters after the market digested Trump’s protectionist and populist inaugural speech over the weekend.
SNB sight deposits increase – The SNB issued its weekly press release on monetary policy data during the session, and it showed that total sight deposits increased from CHF 531,397 million to CHF 532,268 million during the week ending on January 22, which implies that the SNB was likely intervening in the forex market last week. I guess that helps to explain why the Swissy’s price action was very messy last week.
For the newbies out there, sight deposits of domestic banks form part of the monetary base and are used by the SNB for financing currency purchases (*cough* currency manipulation *cough*).
Theresa May’s 10-point plan – According to the BBC, British PM Theresa May will reveal a “new, more interventionist, industrial strategy” that’s meant to “boost the post-Brexit UK economy.” And she will supposedly reveal the details of it in her regional cabinet meeting today.
And the 10-point plan supposedly include as follows:
- Investing in science, research and innovation
- Developing skills
- Upgrading infrastructure
- Supporting business to start and grow
- Improving government procurement
- Encouraging trade and inward investment
- Delivering affordable energy and clean growth
- Cultivating world-leading sectors
- Driving growth across the whole country
- Creating the right institutions to bring together sectors and places
Major Market Movers:
AUD & NZD – Both the higher-yielding Aussie and the Kiwi had a poor start, likely because of the risk-off vibes. However, the two made a comeback about halfway through the session and even managed to win out against their peers, likely because of the commodities rally. And between the two the Aussie had a clear advantage since AUD/NZD was up by 17 pips (+0.16%) to 1.0519 for the session.
AUD/USD was up 14 by pips (+0.19%) to 0.7575 with 0.7550 as session low, AUD/JPY was up 11 by pips (+0.12%) to 85.91 with 85.66 as session low, AUD/CHF was up by 17 pips (+0.24%) to 0.7571 with 0.7535 as session low
NZD/CAD was up by 14 pips (+0.15%) to 0.9570 with 0.9534 as session low, NZD/USD was up by 3 pips (+0.02%) to 0.7201 with 0.7177 as session low, NZD/CHF was up by 5 pips (+0.06%) to 0.7198 with 0.7166 as session low
CAD – Price action on the Loonie was rather choppy. However, the Loonie clearly ended the session on a weaker note against all its peers. It’s very likely that the Loonie got weighed down by the slide in oil prices. However, it’s also possible that the Loonie is suffering from worries on how Trump’s trade policy would affect Canada.
USD/CAD was up by 14 pips (+0.11%) to 1.3288, GBP/CAD was up by 9 pips (+0.06%) to 1.6545, AUD/CAD was up by 30 pips (+0.31%) to 1.0067
- 1:30 pm GMT: Canadian wholesale sales (0.5% expected, 1.1% previous)
- 2:00 pm GMT: China’s CB leading index (1.0% previous)
- 3:00 pm GMT: Euro Zone consumer sentiment (no change from -5 expected)
- 11:30 pm GMT: ECB President Mario Draghi has a speech
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
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