- Italian industrial production m/m: 1.0% vs. 0.4% expected, -2.3% previous
- French BOF business sentiment: 103 vs. 104 previous
- Euro Zone Sentix investor confidence: 23.9 vs. 21.0 expected, 20.7 previous
- SNB sight deposits: CHF 564,117M vs. CHF 561,709M previous
- Fed Chair Yellen will speak later
Trading conditions were a bit subdued during the morning London session, with many currency pairs trading sideways. The Loonie was a clear exception, though, since it charged higher on the back of rising oil prices.
Commodities sink, but oil floats – Commodities got torpedoed during the morning London session. Oil was defiant, however, since it just kept on floating.
Precious metals got kicked lower, despite signs of risk aversion.
- Gold was down by 0.45% to $1,251.65 per troy ounce
- Silver was down by 1.34% to $17.907 per troy ounce
Base metals felt the pain.
- Copper was down by 1.10%% to $2.618 per pound
- Nickel was down by 0.49% to $10,162.50 per dry metric ton
Oil benchmarks, meanwhile, were well-supported.
- U.S. crude oil was up by 0.88% to $52.70 per barrel
- Brent crude oil was up by 0.96% to $55.77 per barrel
The U.S. dollar index was up by 0.06% to 101.14 for the day when the session ended. And that may have helped market players decide to take some profits off the table after last week’s commodities rally.
However, market analysts also blamed the broad-based slide in base metals to jitters that demand from China may be faltering.
As for oil’s defiance, that was apparently due to reports making the rounds that production in Libya’s largest oil field got halted while Russia was supposedly considering an extension of its oil cut deal with OPEC.
Skittish day in Europe – Most European equity indices started the new week on an optimistic note. However, it soon became clear that risk aversion was spreading, as equity indices began turning red one after another.
- The pan-European FTSEurofirst 300 was down by 0.16% to 1,500.29
- Germany’s DAX recouped was down by 0.20% to 12,200.50
- The blue-chip Euro Stoxx 50 was down by 0.40% to 3,478.50.
Market analysts note that the early risk-on vibes was driven by demand for mining and pharma shares. And since metals turned tail during the session, it’s probably safe to say that the returning risk aversion was due to the slump in base metals.
Other than that, market analysts are also still pointing to geopolitical events, especially after Trump ordered a missile strike to punish Syria’s Assad for allegedly gassing beautiful babies.
SNB sight deposits increase – The SNB issued its weekly press release on monetary policy data earlier. And according to the press release, total sight deposits at the SNB increased from CHF 561,709 million to CHF 564,117 million during the week ending on April 7, which implies that the SNB was likely intervening in the forex market last week.
I guess my hunch that the SNB was busy fighting off safe-haven demand for the Swissy last week could be right. It sure explains why the demand for the safe-haven Swissy wasn’t very strong last week, despite plenty of risk events.
Oh, for the newbies out there, sight deposits of domestic banks form part of the monetary base and are used by the SNB for financing currency purchases (*cough* currency manipulation *cough*).
Major Market Mover(s):
CAD – The Loonie was the best-performing currency of the session. There were no direct catalysts, but oil was defiantly staging a rally during the session. And it’s highly likely that the Loonie rode the oil rally to victory against its peers.
USD/CAD was down by 31 pips (-0.23%) to 1.3381, NZD/CAD was down by 31 pips (-0.34%) to 0.9285, EUR/CAD was down by 42 pips (-0.30%) to 1.4152
CHF – price action on the Swissy was a bit choppy. Even so, the Swissy is worth noting because it ended up lower against all its peers, despite the returning risk aversion. No clear reason why, but it’s possible that Swissy bulls may have been spooked by the rise in SNB sight deposits.
USD/CHF was up by 10 pips (+0.10%) to 1.0100, GBP/CHF was up by 13 pips (+0.11%) to 1.2520, CAD/CHF was up by 25 pips (+0.33%) to 0.7548
Watch Out For:
- 12:15 pm GMT: Canada’s housing starts (215.5K expected, 210.2 previous)
- 2:00 pm GMT: U.S. labor market conditions index (1.3 previous)
- 8:10 pm GMT: Fed Chair Janet Yellen will speak