Article Highlights

  • Swiss SECO consumer sentiment: -3 vs. -11 expected, -13 previous
  • German industrial production m/m: -3.0% vs. 0.3% expected. 0.5% previous
  • German industrial production y/y: -0.7% vs. 2.5% expected, 2.2% previous
  • French government budget balance: -€69.0B vs. -€93.3B previous
  • French trade balance: -€3.42B vs. -€4.37B previous
  • U.K. Halifax HPI m/m: -0.9% vs, 0.0% expected, 1.6% previous
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Today’s morning London session had plenty of action, with the pound getting hit by poor data, the yen weighed down by returning risk appetite, the Greenback happily extending its rally, and the euro in recovery mode.

Major Events/Reports:

Commodities crumbleCommodities were broadly in retreat during the morning London session.

Precious metals got beat up.

  • Gold was down by 0.07% to $1,231.25 per troy ounce
  • Silver was down by 0.34% to $17.63 per troy ounce

Base metals, meanwhile, got hammered down.

  • Copper was down by 0.43% to $2.640 per pound
  • Nickel was down by 0.88% to $10,360.00 per dry metric ton

As for oil benchmarks, they also got slapped lower.

  • U.S. crude oil was down by 0.38% to $52.81 per barrel
  • Brent crude oil was down by 0.36% to $55.52 per barrel

The broad-based commodities rout was very likely due to the stronger Greenback. For reference, the U.S. dollar index was up by 0.72% to 100.56 for the day when the session ended. Oh, for the newbies out there, globally-traded commodities are generally prices in U.S. dollars. And if the Greenback strengthens, then that means commodities become more expensive and unattractive to buy (but more attractive to sell).

U.K. Halifax HPI falls – According to mortgage lender Halifax Bank of Scotland, its House Price Index (HPI) showed that British house prices tumbled by 0.9% month-on-month in January after surging by 1.6% previously. This was a severe disappointment because house prices were only expected to flatten out. In addition, January’s reading is the first drop in five months. Moreover, this is the worst reading in seven months.

Risk appetite strikes back – Risk aversion was finally chased away and signs of risk-taking returned, boosting the major European equity indices.

  • The pan-European FTSEurofirst 300 was up by 0.43% to 1,433.94
  • The blue-chup Euro Stoxx 50 was up by 0.21% to 3,247.50
  • Germany’s DAX was also up by 0.56% to 11,574.00

The returning optimism also gave U.S. equity futures a lift, implying that the risk-on vibes may carry over into the next session.

  • S&P 500 futures were up by 0.25% to 2,292.25
  • Nasdaq futures were up by 0.23% to 5,169.63

Market analysts pointed to another round of positive earnings reports as the main reason for the returning risk-on vibes.

Major Market Movers:

EUR – After plunging since yesterday on worries related to the French elections, the euro finally staged a recovery today, despite the risk-on vibes in Europe.

EUR/CHF was up by 17 pips (+0.16%) to 1.0662, EUR/AUD was up by 22 pips (+0.16%) to 1.4007, EUR/NZD was up by 32 pips (+0.21%) to 1.4619

GBP – The pound got slapped broadly lower from the get-go, thanks to the poor reading for the Halifax HPI index.

GBP/USD was down by 59 pips (-0.48%) to 1.2370, GBP/CHF was down by 33 pips (-0.27%) to 1.2353, GBP/CAD was down by 39 pips (-0.24%) to 1.6303

USD – The Greenback extended its rally and ended up as the best performing currency of the session after edging out the euro. Market analysts are still pointing to Philadelphia Fed President Patrick Harker’s hawkish statement from yesterday as the main catalyst.

AUD/USD was down by 17 pips (-0.23%) to 0.7621, USD/CHF was up by 22 pips (+0.18%) to 0.9986, USD/CAD was up by 32 pips (+0.24%) to 1.3181

JPY – The safe-haven yen was the second worst performing currency after the pound. And the yen’s weakness during the session was likely due to the returning risk-on vibes.

USD/JPY was up by 21 pips (+0.19%) to 112.31, EUR/JPY was up by 15 pips (+0.12%) to 119.90, CAD/JPY was up by 13 pips (+0.16%) to 85.21

Watch Out For:

  • 1:30 pm GMT: Canadian trade balance ($1.20B expected, $0.53B previous) and building permits (-3.5% expected, -0.1% previous)
  • 1:30 pm GMT: U.S. trade balance (-$45.0B expected, -$45.2B previous)
  • 3:00 pm GMT: Canada’s Ivey PMI reading (58.3 expected, 60.8 previous)
  • 3:00 pm GMT: JOLTS U.S. job openings (5.56M expected, 5.52M previous)
  • 8:00 pm GMT: U.S. consumer credit ($20.00B expected, $24.53B previous)
  • Dairy auction currently underway (+0.6% previous); auction usually ends at around 2:00 pm GMT

See also:

Asian Session Recap 
U.S. Session Recap

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