Article Highlights

  • Italian industrial production m/m: -2.3% vs. -0.8% expected, 1.4% previous
  • Italian industrial production y/y: -0.5% vs. 3.3% expected, 6.8% previous
  • SNB sight deposits: CHF 555,406M vs. CHF 553,364M previous
  • ECB’s Draghi will speak later
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Lots of action in this week’s first morning London session, with the euro in retreat, the pound mostly higher, and decent two-way action on the Swissy.

Major Events/Reports:

Commodities rise, but oil faltersCommodities were broadly higher during the morning London session. Oil was a clear exception, though.

Base metals got a lot of love.

  • Copper was up by 1.39% to $2.631 per pound
  • Nickel was up by 1.87% to $10,102.50 per dry metric ton

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

  • Gold was up by 0.51% to 1,207.55 troy ounce
  • Silver was up by 1.03% to 17.098 per troy ounce

Oil benchmarks, meanwhile, were leaking red.

  • U.S. WTI crude oil was down by 0.37% to $48.31 per barrel
  • Brent crude oil was down by 0.19% to $51.27 per barrel

Market analysts attribute the commodities rally to the weaker Greenback, which makes globally-traded commodities relatively cheaper. And for reference, the U.S. dollar index was down by 0.28% to 101.10 by the end of the morning London session. Other than that, it’s possible that we’re seeing some profit-taking ahead of the FOMC statement and after last week’s commodities carnage.

As for the dip in oil prices, market analysts blamed that on worries that the oil glut is here to stay, thanks to the rise in U.S. oil inventories and U.S. oil output.

Some optimism to start the week – Many European equity indices started the session in the red. However, it soon became clear that risk appetite was the dominant sentiment as early losses got reversed.

  • The pan-European FTSEurofirst 300 was up by 0.25% to 1,474.14
  • Germany’s DAX was up by 0.10% to 11,973.75
  • The U.K.’s FTSE 100 was up by 0.31% to 7,365.50

Anyhow, market analysts point out that mining shares were the main winners, offsetting the weakness from energy shares. The risk-on vibes therefore appears linked to the commodities rally, with metals in focus.

SNB sight deposits climb higher – The SNB issued a press release earlier, and it showed that the sight deposits that are deposited at the SNB climbed from CHF 553,364 million to CHF 555,406 million during the week ending on March 10. This implies that the SNB may have been busy intervening in the forex market, since sight deposits form part of the monetary base and are used by the SNB for financing currency purchases (*cough* currency manipulation *cough*).

Another Scottish referendum? – Nicola Sturgeon, Scotland’s First Minister, gave a speech during the session. And in that speech, Sturgeon emphasized that 62% of Scots voted against Brexit, opting to remain in the E.U. instead. However, the U.K. government under Theresa May has consistently refused to compromise, Sturgeon said. As such, Sturgeon said that she will ask the Scottish Parliament next week for permission to hold another Scottish independence referendum.

Major Market Mover(s):

EUR – The euro was broadly weaker during today’s morning London session. Other than the risk-on vibes and profit-taking after a two-week rally, there wasn’t really anything major for the euro, though.

EUR/USD was down by 44 pips (-0.42%) to 1.0667, EUR/GBP was down by 45 pips (-0.52%) to 0.8725, EUR/CAD was down by 53 pips (-0.37%) to 1.4343

GBP – There were no apparent catalysts, but the pound jumped higher when the morning London session rolled around. Market analysts attributed this to expectations that MPs at the House of Commons will overturn the amendments introduced by the Lords, thereby reducing the chance for a delay and reducing Brexit-related jitters.

After the initial jump, the pound spent most of the session giving back its gains. The pound then got another bullish infusion near the end, apparently because of Sturgeon’s announcement that she plans to ask for another Scottish referendum, market analysts say, which is kinda strange since another Scottish referendum would likely cause uncertainty to rise.

GBP/USD was up by 13 pips (+0.11%) to 1.2226, GBP/CAD was up by 25 pips (+0.15%) to 1.6438, GBP/JPY was up by 32 pips (+0.22%) to 140.17

CHF – The Swissy was one of biggest movers of the session, at least in terms of volatility. In terms of directional movement, however, not so much.

Anyhow, the Swissy started off by slumping across the board when the London session rolled around. The report for the SNB’s sight deposits was the likely catalyst, since European equities started the session in the red. Although I suspect the sneaky SNB was also weakening the Swissy as well. The Swissy then quickly regained strength after that, erasing most of its losses. No clear reason why, though, since risk appetite made a comeback.

USD/CHF was up by 17 pips (+0.18%) to 1.0085 after being up by 49 pips (+0.48%) to 1.0116 earlier, AUD/CHF was down by 5 pips (-0.06%) to 0.7633 after being up by 28 pips (+0.37%) to 0.7665 earlier, EUR/CHF was down by 26 pips (-0.24%) to 1.0759 after being up by 39 pips (+0.36%) to 1.0824 earlier

Watch Out For:

  • 1:30 pm GMT: ECB President Mario Draghi will speak
  • 2:00 pm GMT: U.S. labor market conditions index (1.3% previous)

See also:

Asian Session Recap 
Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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