- German PPI m/m: 0.2% vs. 0.4% expected, 0.7% previous
- German PPI y/y: 3.1% vs. 3.2% expected, 2.4% previous
- Euro Zone labor cost index y/y: 1.60% as expected, 1.40% previous
The Greenback was in recovery mode during today’s morning London session while the Loonie got pulled down by sliding oil prices. Meanwhile, there was decent two-way action on the pound, as the pound’s rise got cut short after it was announced that the formal Brexit Process will start on March 29.
Brexit process to start on March 29 – There were rumors earlier that March 29 is the day of reckoning for triggering Article 50 of the TEU. And for those who don’t know, Article 50 of the TEU needs to be invoked in order to start the formal process for an actual Brexit. You can read more about it in Forex Gump’s primer here.
Getting back on topic, those rumors turned out to be true, because James Slack, Theresa May’s spokesman announced later during the session that Tim Barrow, the U.K.’s diplomat to the E.U., has informed the office of European Council President Donald Tusk via a letter that the U.K. will begin the formal process for an actual Brexit on March 29. And European Commission spokesman Margaritis Schinas has told reporters that the EU is “ready to begin negotiations.”
Interesting times ahead, huh?
Commodities dip, precious metals resist – Commodities were mostly lower during the morning London session. Precious metals were an exception, though. Oil benchmarks, meanwhile, were quite noticeable because they printed the largest losses.
Oil benchmarks got whupped hard.
- U.S. WTI crude oil was down by 1.12% to $48.76 per barrel
- Brent crude oil was down by 0.89% to $51.30 per barrel
Base metals, meanwhile, were suffering.
- Copper was down by 0.58% to $2.676 per pound
- Zinc was down by 0.28% to $2,883.50 per dry metric ton
Precious metals were just chilling out in the green.
- Gold was up by 0.13% to 1,231.75 per troy ounce
- Silver was up by 0.03% to 17.418 per troy ounce
The U.S. dollar index was still down by 0.10% to 100.04 for the day when the session ended. However, the Greenback was actually deeper in the red earlier and spent the session by clawing its way higher. And the Greenback’s recovery likely weighed down on commodities. Although profit-taking after a strong week last week is also a possibility.
Other than that, market analysts also point to supply worries for some base metals. The plunge in oil prices, meanwhile, was being blamed by market analysts on worries that rising U.S. oil output may already be offsetting OPEC’s oil cut deal.
As to why precious metals were going against the flow, that was likely due to safe-haven demand. After all, precious metals are considered as traditional safe-havens and risk aversion was the dominant sentiment during the session.
Risk aversion in Europe – Many European equity indices started the session in the red. However, it soon became clear that risk appetite was more dominant as equity indices began turning green.
- The pan-European FTSEurofirst 300 was down by 0.23% to 1,488.48
- Germany’s DAX was down by 0.35% to 12,053.35
- The blue-chip Euro Stoxx 50 was down by 0.11% to 3,439.00
- The U.K.’s FTSE 100 was down by 0.15% to 7,413.50
U.S. equity futures also felt the risk-off vibes.
- S&P 500 futures were down by 0.13% to 2,372.25
- Nasdaq futures were down by 0.03% to 5,407.12
Market analysts blamed the skittish sentiment in Europe on the slide in oil prices, which dragged energy shares lower. Other than that, worries over Deutsche Bank apparently weighed down on banking shares ahead of the German Banking giant’s €8 billion cash call tomorrow.
Major Market Mover(s):
GBP – The pound was in demand earlier during the session, thanks to optimism over last week’s BOE statement, market analysts say. However, the pound got rushed by sellers later when it was announced that March 29 would be the promised day for starting the Brexit process.
GBP/USD was up by 36 pips (+0.30%) to 1.2435 earlier but was down by 15 pips (-0.12%) to 1.2383 in the end, GBP/JPY was up by 45 pips (+0.32%) to 140.14 earlier but was only up by 9 pips (+0.07%) to 139.78 in the end, GBP/AUD was up by 39 pips (+0.25%) to 1.6085 earlier but was down by 9 pips (-0.06%) to 1.6036 in the end
USD – The Greenback staged a broad-based recovery during the morning London session. However, there were no apparent catalysts for the Greenback’s recovery. Although it’s possible that some shorts were squaring away some of their shorts ahead of a Fed speaker for later, as well as Trump’s speech much later.
USD/JPY was up by 21 pips (+0.19%) to 112.87, USD/CAD was up by 37 pips (+0.28%) to 1.3354, USD/CHF was up by 15 pips (+0.15%) to 0.9975
CAD – The Loonie was the worst-performing currency of the session, very likely because of the slide in oil prices.
EUR/CAD was up by 12 pips (+0.08%) to 1.4355, AUD/CAD was up by 21 pips (+0.21%) to 1.0311, NZD/CAD was up by 13 pips (+0.14%) to 0.9395
- 12:30 pm GMT: Canadian wholesales sales (0.5% expected, 0.7% previous)
- 2:30 pm GMT: CB’s Australian leading index (-0.1% previous)
- 5:10 pm GMT: Chicago Fed President Charles Evans will speak
- 6:20 pm GMT: BOE MPC member and chief economist Andy Haldane has a speech
- 9:45 pm GMT: New Zealand’s visitor arrivals (1.9% previous)
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!