- UBS Swiss consumption indicator: 1.43 vs. 1.50 expected, 1.38 previous
- Nationwide U.K. HPI m/m: 0.6% vs. 0.2% expected, 0.2% previous
- French final manufacturing PMI: unchanged at 52.3 as expected
- German final manufacturing PMI: 56.8 vs. steady at 57.0 expected
- Euro Zone final manufacturing PMI: 55.4 vs. steady at 55.5 expected
- German jobless rate: steady at 5.9% as expected
- U.K. manufacturing PMI: 54.6 vs. 55.7 expected, same as previous
- German HICP m/m: 0.7% vs. 0.6% expected, -0.6% previous
- German HICP y/y: 2.2% vs. 2.1% expected, 1.9% previous
- BOC monetary policy decision and statement later
Forex price action in Europe was relatively more subdued compared to the rather lively Asian session. The only real mover was the pound, although the Greenback also managed to extend its gains a little bit during the session.
U.K. manufacturing PMI dips – According to the latest PMI report from Markit, the U.K.’s PMI reading dipped from 55.7 to 54.6 in February. The dip was attributed to the slower rate of increase in output and new orders. And the slowdown, in turn, was due to weaker domestic demand. Although this was partially offset by “a sharp acceleration in the rate of increase in new export business.” Survey respondents reported that exports increased particularly to “mainland Europe, the USA, Asia, Australia, Canada and Ireland.”
The BOE’s Money and Credit report – Earlier today, the BOE released its Money and Credit report for the month of January.
And according to the said report, the number of mortgage approvals rose to 69,928 in January, which is more than the 68,266 printed in December. In addition, January’s reading is higher than the six-month average of 65,066. Moreover, the reading is the highest reading since February 2016.
As for net lending to individuals, that increased by £4.8 billion in January, which is more than the expected £4.0 billion. January’s reading is also higher than the £4.7 that was printed in December.
Brexit Bill Update – According to the BBC, peers at the House of Lords want to add an amendment that protects the rights of E.U. citizens. However, if the Brexit Bill is passed back to the House of Commons, the MPs there may decide to scrap the amendments. In the process, a so-called political “ping pong” between the House of Lords and House of Commons may start, which will likely raise Brexit-related uncertainty.
Commodities rally, precious metals retreat – Commodities staged a broad-based rally during the morning London session, with base metals leading the way. Precious metals were feeling a bit anemic, though.
Based metals were also in really high demand.
- Copper was up by 1.36% to $2.751 per pound
- Zinc was up by 2.02% to $2,875.50 per dry metric ton
Oil benchmarks didn’t rally as hard, but were in positive territory.
- U.S. crude oil was up by 0.17% to $54.10 per barrel
- Brent crude oil was up by 0.27% to $56.66 per barrel
As for precious metals, they sadly didn’t get a lot of love.
- Gold was down by 0.74% to $1,244.65 per troy ounce
- Silver was down by 0.42% to $18.392 per troy ounce
The broad-based and rapid climb in base metal prices was attributed by market analysts to optimism that demand for base metals would pick up after Trump announced his plans for a trillion-dollar infrastructure program when he spoke to Congress earlier.
The moderate rise in oil prices, meanwhile, was attributed by market analysts to reports that oil producers were strictly complying with their obligations pursuant to the OPEC oil cut deal.
As for the slide in precious metals, that was likely due to the strong dollar and prevalence of risk appetite during the morning London session.
Risk-on! – European market players were apparently in a very upbeat mood, since European equity indices climbed higher during the session.
The pan-European FTSEurofirst 300 was up by 1.15% to 1,475.41
- The blue chip Euro Stoxx 50 was up by 1.45% to 3,372.50
- Germany’s DAX was up by 1.32% to 11,991.00
Even the risk-on vibes in Europe gave U.S. equity futures a bullish boost.
- S&P 500 futures were up by 0.45% to 2,373.50
- Nasdaq futures were up by 0.51% to 5,359.63
Market analysts note that basic resources, which includes mining companies, were the main winners. And these market analysts attributed the rally in mining shares to optimism over Trump’s planned $1 trillion of infrastructure program, as I already mentioned earlier.
Major Market Movers:
GBP – The pound was initially in hibernation mode, even as economic reports got released. Even the unexpected dip in the U.K.’s manufacturing PMI reading wasn’t enough to rouse the pound from its slumber. However, the pound woke up about two hours later and apparently fell out of bed, since pound pairs got dumped. There were no apparent catalysts for this sudden weakness. However, it’s possible that the pound’s sudden weakness was due to Brexit-related jitters after reports that there may be a problem in the House of Lords began to circulate.
GBP/USD was down by 65 pips (-0.53%) to 1.2305, GBP/AUD was down by 71 pips (-0.44%) to 1.6064, GBP/CAD was down by 85 pips (-0.51%) to 1.6391
USD – The Greenback extended its gains from the earlier sessions to end up a net winner during this session. The Greenback’s strength appears tied to hawkish rhetoric from Fed officials, as well as optimism over the U.S. economy, thanks to Trump’s plans for a trillion-dollar infrastructure program. By the, you can read the highlights of Trump’s speech here, if you somehow missed it.
EUR/USD was down by 14 pips (-0.13%) to 1.0526, USD/JPY was up by 29 pips (+0.26%) to 113.78, USD/CHF was up by 19 pips (+0.19%) to 1.0112
- 1:30 pm GMT: Canada’s current account (-$9.75B expected, -$18.30B previous)
- 1:30 pm GMT: U.S. core PCE price index (0.3% expected, 0.1% previous), U.S. personal spending (0.3% expected, 0.5% previous), and U.S. personal income (0.3% expected, same as previous)
- 2:30 pm GMT: Markit-RBC’s Canadian manufacturing PMI (53.5 previous)
- 2:45 pm GMT: Markit’s final U.S. manufacturing PMI (upward revision from 54.3 to 54.5 expected)
- 3:00 pm GMT: ISM’s manufacturing PMI (56.0 expected, same as previous)
- 3:00 pm GMT: BOC monetary policy decision and statement (overnight rate steady at 0.50% expected)
- 3:30 pm GMT: U.S. crude oil inventories (1.5M expected, 0.6M previous)
- 6:00 pm GMT: Dallas Fed President Robert Kaplan will speak
- 8:00 pm GMT: RBNZ Governor Graeme Wheeler will talk about monetary policy
- 11:00 pm GMT: Federal Reserve Governor Lael Brainard has a speech
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!