Article Highlights

  • Swiss jobless rate: steady at 3.3% as expected
  • German trade balance: €18.7B vs. €20.5B expected, €22.7B previous
  • German current account: €24.0B vs. €23.8B expectwed, €25.9B previous
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Like yesterday, there were only a few items on the calendar for the morning London session. Unlike yesterday, however, there was price action aplenty, as the Swissy got dumped while the pound and all the comdolls got bid up. And yes, I do mean ALL the comdolls, since the Kiwi was in recovery mode during the session.

Major Events/Reports:

Commodities broadly higher – Commodities staged a broad-based rally during the morning London session.

Precious metals were in the green, despite the risk-on vibes.

  • Gold was up by 0.25% to $1,242.55 per troy ounce
  • Silver was up by 0.20% to $17.740 per troy ounce

Base metals, meanwhile, were mixed, but mostly up.

  • Copper was up by 0.13% to $2.670 per pound
  • Nickel was up by 0.62% to $2,863.00 per dry metric ton

As for oil benchmarks, they were charging higher.

  • U.S. crude oil was up by 0.99% to $52.86 per barrel
  • Brent crude oil was up by 1.00% to $55.67 per barrel

There was no clear reason for the broad-based commodities rally, since the U.S. dollar index was up by 0.19% to 100.33 for the day. However, market analysts point to political risks in Europe and the U.S. as the main reason why precious metals were in demand, despite the overall risk-friendly environment. After all, precious metals are considered as traditional safe-havens. The oil rally, meanwhile, was attributed by market analysts to the surprise draw in U.S. gasoline inventories, which lifted hopes for stronger demand for oil.

More risk-taking in Europe – Risk appetite is still the dominant sentiment in Europe, so the major European equity indices got boosted for the third day running.

  • The pan-European FTSEurofirst 300 was up by 0.47% to 1,440.87
  • The blue-chup Euro Stoxx 50 was up by 0.91% to 3,267.50
  • Germany’s DAX was also up by 0.73% to 11,627.50

The risk-friendly environment in Europe even gave U.S. equity futures a lift.

  • S&P 500 futures were up by 0.23% to 2,295.50
  • Nasdaq futures were up by 0.18% to 5,200.50

Today’s round of risk-taking in Europe was attributed my market analysts to yet another round of positive earnings reports. Although some market analysts also point to higher oil prices, since energy company shares got a boost.

Major Market Movers:

GBP – The pound had a hard time against the comdolls and even barely lost out to the Aussie. Still, the pound managed to end up as the second strongest currency of the session. This is kinda weird, though, since there was no direct catalyst for the broad-based demand for the pound.

Some market analysts attributed the pound’s strength to U.K. housing data from the earlier Asian session, but that was several hours ago and doesn’t really seem likely. The Brexit Bill also passed through the House of Commons with a 494-122 majority vote during the earlier Asian session, which should remove some Brexit-related uncertainty.

However, the Brexit Bill passed without any amendments, which is bad for the U.K., according to the current narrative. The Brexit Bill update is therefore also an unlikely reason for the pound rally, unless the market is being extra optimistic. Or maybe the market is betting amendments would be added or that the Brexit Bill would be delayed in the House of Lords? After all, Theresa May’s Conservative Party does not have a majority there.

Well, whatever the case may be, the fact still remains that the pound was in demand, at least during this session.

GBP/USD was up by 48 pips (+0.39%) to 1.2506, GBP/JPY was up by 57 pips (+0.41%) to 141.12, GBP/CHF was up by 85 pips (+0.69%) to 1.2553

Comdolls – All the comdolls (AUD, NZD, CAD) were in high demand during the session, very likely because of the broad-based commodities rally. Although the risk-on vibes also likely helped stoke demand for the higher-yielding Kiwi and Aussie as well. Speaking of the Kiwi, it’s also possible that the Kiwi got an extra lift from by profit-taking by Kiwi shorts after the Kiwi plunged in the wake of the not-so-hawkish RBNZ statement.

AUD/USD was up by 33 pips (+0.43%) to 0.7651, AUD/JPY was up by 38 pips (+0.45%) to 85.96, AUD/CAD was up by 17 pips (+0.17%) to 1.0034

NZD/USD was up by 21 pips (+0.30%) to 0.7219, NZD/JPY was up by 23 pips (+0.29%) to 81.10, NZD/CHF was up by 42 pips (+0.60%) to 0.7215

USD/CAD was down by 37 pips (-0.28%) to 1.3113, CAD/JPY was up by 25 pips (+0.29%) to 85.66, CAD/CHF was up by 42 pips (+0.56%) to 0.7620

CHF – The Swissy was already showing signs of weakness from the get-go, thanks to the risk-on mood. However, the Swissy’s weakness suddenly worsened about halfway through the session. There was no apparent catalyst for this sudden bearish pressure on the Swissy. Hmm. Was the SNB sneakily weakening the Swissy again, I wonder?

AUD/CHF was up by 55  pips (+0.72%) to 0.7647, EUR/CHF was up by 35 pips (+0.34%) to 1.0678, USD/CHF was up by 29  pips (+0.29%) to 0.9994

Watch Out For:

  • 1:30 pm GMT: Canada’s NHPI (0.2% expected, same as previous)
  • 1:30 pm GMT: U.S. initial jobless claims (249K expected, 246K previous)
  • 3:00 pm GMT: U.S. wholesale inventories (1% expected, same as previous)
  • 4:35 pm GMT: BOC Deputy Governor Lawrence Schembri has a speech
  • 6:10 pm GMT: Chicago Fed President Charles Evans will speak
  • 6:30 pm GMT: BOE Governor Mark Carney will deliver a short speech

See also:

Asian Session Recap 
U.S. Session Recap

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