Article Highlights

  • German final HICP m/m: unchanged at 0.7% as expected
  • German final HICP y/y: unchanged at 2.2% as expected
  • Euro Zone industrial production m/m: 0.9% vs. 1.3% expected, -1.2% previous
  • Euro Zone industrial production y/y: 0.6% vs. 0.9% expected, 2.5% previous
  • ZEW Euro Zone economic sentiment: 25.6 vs. 19.3 expected, 17.1 previous
  • ZEW German economic sentiment: 12.8 vs. 13.2 expected, 10.4 previous
  • U.S. NFIB small business index: 105.3 vs. 106.1 expected, 105.9 previous
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Nothing really major on the docket for today’s morning London session, so forex price action was relatively subdued. Both the pound and the euro were clearly under bearish pressure, though.

Major Events/Reports:

Most commodities flee, but precious metals prevail – Commodities got routed during the morning London session. Precious metals were a clear exception, though, since they were well-supported.

Base metals got whupped.

  • Copper was up by 0.26% to $2.616 per pound
  • Nickel was up by 0.54% to $10,157.50 per dry metric ton

Oil benchmarks, meanwhile, got torpedoed.

  • U.S. WTI crude oil was down by 1.61% to $47.62 per barrel
  • Brent crude oil was down by 1.38% to $50.64 per barrel

As for precious metals, they were the exception, since they got bid higher.

  • Gold was up by 0.29% to 1,206.55 troy ounce
  • Silver was up by 0.27% to 17.017 per troy ounce

The broad-based commodities retreat was likely due to the stronger Greenback. And for reference, the U.S. dollar index was up by 0.23% to 101.49 for the day by the end of the session. Admittedly, however, the Greenback’s price action was actually mixed during the session, albeit mostly stronger.

It’s also worth pointing out that oil was actually in positive territory for most of the session. Oil later turned tail and took a plunge, though, and that was apparently due to a Bloomberg report stating that “Saudi Arabia told OPEC it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month.”

Risk aversion returns – Risk aversion made a comeback during today’s morning London session, causing the major European equity indices to slide into negative territory.

  • The pan-European FTSEurofirst 300 was down by 0.23% to 1,473.57
  • Germany’s DAX was down by 0.37% to 11,945.75
  • The blue-chip Euro Stoxx 50 was down by 0.28% to 3,408.00
  • The U.K.’s FTSE 100 was down by 0.10% to 7,359.50

Even U.S. equity futures could feel the weight off all risk aversion.

  • S&P 500 futures were down by 0.36% to 2,363.25
  • Nasdaq futures were down by 0.28% to 5,384.12

Market analysts blamed the gloomy mood on uncertainty ahead tomorrow’s Dutch parliamentary elections, as well as jitters ahead of the FOMC statement.

Major Market Mover(s):

GBP – The pound was the worst-performing currency of the morning London session. Interestingly enough, the pound started weakening across the board before the London session even rolled around. There were no direct catalysts for the pound’s weakness then. And there were also no direct catalysts for the pound’s persistent weakness during the course of the session. However, some market analysts are pointing to profit-taking after yesterday’s pound rally, as well as returning worries over an actual Brexit and the possibility of another Scottish referendum.

GBP/USD was down by 29 pips (-0.24%) to 1.2128, GBP/AUD was down by 32 pips (-0.20%) to 1.6053, GBP/JPY was down by 37 pips (-0.27%) to 139.47

EUR – The euro was the second weakest currency of the session after the pound. Risk aversion was the dominant sentiment and economic reports for the Euro Zone were mixed, so the euro’s weakness appears wonky on the surface.

However, some market analysts are blaming the euro’s weakness on yesterday’s dovish rhetoric from some ECB officials. One of the most commonly cited is ECB Governing Council Member Jan Smets’s comment that the ECB has not yet started removing stimulus, as well rejecting the market’s hawkish interpretation of last week’s ECB statement. Other than that, it’s possible that worries over tomorrow’s Dutch parliamentary elections are weighing down on the euro.

EUR/USD was down by 13 pips (-0.13%) to 1.0631, EUR/JPY was down by 17 pips (-0.14%) to 122.26, EUR/CHF was down by 14 pips (-0.13%) to 1.0723

JPY – Ths returning risk-off vibes very likely sent safe-haven flows towards the yen, which allowed the yen to end the session as the king of pips (or queen, if you like).

USD/JPY was down by 15 pips (-0.14%) to 115.01, CAD/JPY was down by 12 pips (-0.15%) to 85.39, NZD/JPY was down by 13 pips (-0.16%) to 79.43

Watch Out For:

  • 12:30 pm GMT: Headline (0.1% expected, 0.6% previous) and core (0.2% expected, 0.4% previous) readings for U.S. PPI
  • 1:30 pm GMT: CB’s U.K. leading index (0.0% previous)
  • 9:45 pm GMT: New Zealand’s current account (-$2.43B expected, -$4.89B previous)

See also:

Asian Session Recap 
U.S. Session Recap

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