Article Highlights

  • Euro Zone current account: €24.1B vs. €29.3B expected, €30.8B previous
  • RBNZ rate decision and statement later
  • Vote to start process for Scottish referendum later
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Price action was a bit choppy across most pairs, but the yen clearly reigned supreme during today’s morning London session, thanks to slumping bond yields amid another round of risk aversion.

Major Events/Reports:

Commodities crushed – The previous session’s theme continued to play out, since commodities were still drowning in a sea of red.

Oil benchmarks were still bleeding out.

  • U.S. WTI crude oil was down by 1.18% to $47.67 per barrel
  • Brent crude oil was down by 1.22% to $50.34 per barrel

Base metals, meanwhile, continue to sink.

  • Copper was down by 0.74% to $2.599 per pound
  • Nickel was down by 1.75% to $9,972.50 per dry metric ton

As for precious metals, they were down despite the risk-on vibes.

  • Gold was down by 0.12% to 1,245.05 per troy ounce
  • Silver was down by 0.43% to 17.508 per troy ounce

Market analysts are still blaming the general weakness in commodities to worries that Trump’s fiscal stimulus plans might get delayed. Other than that, it’s possible that the Greenback’s slight recovery may have weighed down on commodity prices. And for reference, the U.S. dollar index was up by 0.11% to 99.66 for the day when the session ended. Admittedly, however, the Greenback’s performance during the course of the session was actually mixed.

Risk-off day in Europe – Risk aversion plagued European equity indices, pushing them into the red.

  • The pan-European FTSEurofirst 300 was down by 0.63 to 1,471.72
  • Germany’s DAX was down by 0.49% to 11,903.75
  • The blue-chip Euro Stoxx 50 was down by 0.31% to 3,415.50

U.S. equity futures also were also feeling the burn from all that risk aversion.

  • S&P 500 futures were down by 0.10% to 2,340.00
  • Nasdaq futures were down by 0.08% to 5,334.12

Market analysts point out that banks and mining companies were the main losers. Mining companies obviously got weighed down by the broad-based commodities slide. Banks, meanwhile, supposedly got gutted because of growing doubt over Trump’s ability to deliver his planned fiscal stimulus plans.

You see, Trump’s planned fiscal stimulus was expected to speed up U.S. economic growth, which would then cause inflation to rise faster. And higher inflation means higher interest rates to keep inflation in check.

Bond yields plunge hard – Another sign of risk aversion was the hard, broad-based drop in bond yields during the session, thanks to safe-haven demand for bonds.

  • French 10-year bond yield down by 3.27% to 1.066%
  • German 10-year bond yield down by 9.35% to 0.417%
  • U.K. 10-year bond yield down by 3.27% to 1.214%
  • U.S. 10-year bond yield down by 1.04% to 2.409%

Major Market Mover(s):

JPY – The yen was the one currency to rule them all during the session, thanks to yet another round of risk aversion domination.

USD/JPY was down by 15 pips (-0.14%) to 111.29, EUR/JPY was down by 44 pips (-0.37%) to 120.06, NZD/JPY was down by 26 pips (-0.33%) to 78.21

GBP – Price action on the pound was rather choppy. However, the pound closed out the session on a lower note against all its peers. There were no direct catalysts, but some market analysts pointed to weakening belief that the BOE may be hiking soon. However, it’s also possible that market players were just jittery or taking some profits off the table because of the upcoming vote in the  Scottish Parliament on Sturgeon’s plan to call for another Scottish referendum.

GBP/USD was down by 39 pips (-0.32%) to 1.2452, GBP/JPY was down by 60 pips (-0.43%) to 138.59, GBP/CHF was down by 28 pips (-0.23%) to 1.2372

Watch Out For:

  • 1:00 pm GMT: U.S. HPI (0.4% expected, same as previous)
  • 2:00 pm GMT: SNB quarterly bulletin will be released
  • 2:00 pm GMT: U.S. existing home sales (5.55M expected, 5.69M previous)
  • 2:30 pm GMT: U.S. crude oil inventories (1.9M expected, -0.2M previous)
  • 7:45 pm GMT: BOC Deputy Governor Lawrence Schembri will speak
  • 8:00 pm GMT: RBNZ rate statement (OCR steady at 1.75% expected); read Forex Gump’s write-up for that here 

See also:

Asian Session Recap 
U.S. Session Recap

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