- German factory orders m/m: 5.2% vs. 0.5% expected, -3.6% previous
- Euro Zone Sentix indicator: 17.4 vs. 16.8 expected, 18.2 previous
- Euro Zone retail PMI: 50.1 vs. 50.4 previous
- ECB Overlord Draghi will testify later
Many currency pairs were range-bound during today’s morning London session. However, the prevalence of risk aversion apparently spurred demand for the safe-haven yen. The euro, meanwhile, extended its losses from the earlier session.
Front National in front – According to the latest poll on the French elections from opinionway, Front National’s Marine le Pen has 26%, which means that she is now at the head of the pack for the first round in the race for the French Presidency. The poll results also show Le Pen would still lose to independent Emannuel Macron 65% to 35%, though.
For those who don’t know, Front National is a populist, Eurosceptic party that’s considered as being in the far-right. So if Marine le Pen does win, she’ll likely push for a French version of Brexit, or at least be extremely antagonistic to the E.U.
Some skittishness to start the week – European equity indices had a promising start. However, it soon became apparent that risk aversion was the dominant sentiment, as equity indices began turning red one after another.
- The pan-European FTSEurofirst 300 was down by 0.19% to 1,433.70
- The blue-chup Euro Stoxx 50 was down by 0.82% to 3,250.50
- Germany’s DAX was also down by 0.84% to 11,553.15
The risk-off vibes also weighed down on U.S. equity futures.
- S&P 500 futures were down by 0.19% to 2,286.75
- Nasdaq futures were down by 0.21% to 5,144.25
Market analysts attributed the earlier risk-on vibes to positive earnings reports for various European companies.
The reason for the returning risk-off vibes is not very clear, however. Although jitters over the French elections was likely a factor, since European equity indices sank even deeper when opinionway released its poll results.
Bond yields plunge – Another sign of risk aversion was the plunge in bond yields during the session.
- German 10-year bond yield down by 12.08% to 0.364%
- U.K. 10-year bond yield down by 3.17% to 1.313%
- U.S. 10-year bond yield down by 2.68% to 2.424%
Major Market Movers:
EUR – Most euro pairs have been sliding lower since the new trading week got underway. And that slide only accelerated during the morning London session and despite overall positive economic reports.
Initially, there was no clear reason for the euro’s broad-based weakness. However, market analysts were pointing to election worries in France after Francois Fillon lost the lead in the polls, as the anti-EU French National’s Marine Le Pen took even more ground. This appears to be indeed the case, since the euro’s slide accelerated even further when opinionway released its poll results showing Marine le Pen in the lead for the first round of the elections.
EUR/USD was down by 18 pips (-0.17%) to 1.0733, EUR/CHF was down by 18 pips (-0.17%) to 1.0672, EUR/JPY was down by 73 pips (-0.60%) to 120.48
JPY – The yen was the best-performing currency of the session. And that was very likely because the gloomy mood in Europe spurred safe-haven demand for bonds, which crushed global bond yields. And that, as well as safe-haven demand for the yen itself, likely allowed the yen to climb higher.
USD/JPY was down by 49 pips (-0.43%) to 112.23, CHF/JPY was down by 51 pips (-0.45%) to 112.86, CAD/JPY was down by 48 pips (-0.55%) to 86.05
- 2:00 pm GMT: ECB President Mario Draghi will testify before the Economic and Monetary Affairs Committee
- 3:00 pm GMT: U.S. labor market conditions index (-0.3 previous)
- 9:30 pm GMT: Philadelphia Fed President Patrick Harker has a speech
- 10:30 pm GMT: AIG’s Australian construction index (47.0 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!