Article Highlights

  • French INSEE consumer confidence: unchanged at 100 as expected
  • Italian industrial new orders y/y: -0.9% vs. 0.1% previous
  • Italian industrial sales y/y: 9.4% vs. 3.0% previous
  • U.K. BBA mortgage approvals: 44.7K vs. 42.6K expected, 42.23K previous
  • Canada’s CPI report will be released later
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Forex traders were apparently taking cues from the risk-off vibes during today’s morning London session, since the higher-yielding Aussie and Kiwi got torpedoed. Meanwhile, the safe-haven yen and Swissy were in high demand.

Major Events/Reports:

Commodities climb, but oil falters – Commodities were mostly in positive territory during the morning London session. Oil was a very noticeable exception, however.

Precious metals were in the green.

  • Gold was up by 0.56% to $1,258.45 per troy ounce
  • Silver was up by 0.88% to $18.277 per troy ounce

The same can also be said of base metals.

  • Copper was up by 0.74% to $2.663 per pound
  • Nickel was up by 1.30% to $10,700.00 per dry metric ton

Oil benchmarks, meanwhile, went against the green tide, as mentioned earlier.

  • U.S. crude oil was down by 0.70% to $54.07 per barrel
  • Brent crude oil was down by 0.81% to $56.12 per barrel

The U.S. dollar index was down by 0.17% to 100.78 when the session ended. And that was very likely the reason for the broad-based commodities rally. As for the slide in oil prices, that was blamed by market analysts on disappointment over yesterday’s rise in U.S. oil inventories.

Risk aversion to end the week – European equity indices were in a sea of red during today’s morning London session.

  • The pan-European FTSEurofirst 300 was down by 0.86% to 1,457.60
  • The blue chip Euro Stoxx 50 was down by 0.94% to 3,298.50
  • Germany’s DAX was down by 1.20% to 11,807.00
  • The U.K.’s FTSE 100 was down by 0.64% to 7,224.50

Even U.S. equity futures were reeling in pain.

  • S&P 500 futures were down by 0.41% to 2,353.00
  • Nasdaq futures were down by 0.50% to 5,305.12

Market analysts blamed the intense risk aversion on banking shares getting crushed, particularly Standard Chartered and French and Italian banks. As for specifics, Standard Chartered got dumped when it reported that dividends would not be paid out, thanks to restructuring costs. Italian banks, meanwhile, were hit by worries over Italian government bonds. As for French banks, they were dropping apparently because of jitters related to the French presidential elections.

Bond yields fall – Another sign of risk aversion was the fall in global bond yields during the session.

  • French 10-year bond yields were down by 2.25% tp 0.957%
  • German 10-year bond yields were down by 11.44% to 0.209%
  • U.K. 10-year bond yields were down by 3.04% to 1.118%
  • U.S. 10-year bond yields were down by 0.89% to 2.367%

Major Market Movers:

AUD & NZD – Commodities rose during the morning London session. Even so, that didn’t help the Aussie and the Kiwi, since market players were apparently more focused on risk sentiment. And since risk aversion was the dominant sentiment, both higher-yielding currencies were feeling the pain.

AUD/USD was down by 30 pips (-0.40%) to 0.7684, AUD/CAD was down by 22 pips (-0.22%) to 1.0074, AUD/JPY was down by 71 pips (-0.82%) to 86.25

NZD/USD was down by 26 pips (-0.36%) to 0.7206, NZD/CAD was down by 15 pips (-0.16%) to 0.9449, NZD/CHF was down by 40 pips (-0.55%) to 0.7234

JPY & CHF – The risk-off environment may have been toxic for the higher-yielders. However, it was heaven for the safe-havens. As such, both the yen and the Swissy just plowed through their forex rivals during the session.

USD/JPY was down by 47 pips (-0.42%) to 112.24, CAD/JPY was down by 53 pips (-0.62%) to 85.60, NZD/JPY was down by 62 pips (-0.76%) to 80.91

USD/CHF was down by 23 pips (-0.24%) to 1.0033, CAD/CHF was down by 33 pips (-0.44%) to 0.7650, AUD/CHF was down by 49 pips (-0.63%) to 0.7709

Watch Out For:

  • 1:30 pm GMT: Headline (0.3% expected, -0.2% previous), common (1.4% previous), median (2.0% previous), and trimmed (1.6% previous) readings for Canada’s CPI will be released
  • 3:00 pm GMT: U.S. revised home sales (575K expected, 536K previous)
  • 3:00 pm GMT: Revised University of Michigan consumer sentiment (upgrade from 95.7 to 96.0 expected)

See also:

Asian Session Recap 
U.S. Session Recap

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