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The pound found some buyers after the latest U.K. jobs report got released. The Kiwi, meanwhile, was on the defensive yet again, likely because of the returning risk-off vibes.

  • German WPI m/m: 0.9% vs. 1.1% expected, 0.8% previous
  • U.K. jobless rate: steady at 4.7% as expected
  • Claimant count change in the U.K.: 25.5K vs. -10.2K expected, -6.1K previous
  • U.K. average earning index (no bonus): 2.2% vs. 2.1% expected, 2.4% as previous
  • U.K. average earning index (w/ bonus): 2.3% vs. 2.2% expected, 2.3% previous
  • BOC rate statement and presser later

Major Events/Reports:

Wage growth in the U.K. recovers, but… – According to the latest jobs report released by the Office for National Statistics (ONS), the U.K.’s jobless rate held steady 4.7% in the three months to February. This is great because the reading is the lowest since the July-September 2005 reporting period.

The employment rate, meanwhile, also held steady at 74.6%, the highest reading since comparable records began in 1971.

On a slightly more downbeat note, the number of people claiming unemployment benefits rose by 25.5K in March, instead of falling further by 10.2K.

As for wages, nominal average weekly earnings (bonuses included) grew by 2.9% year-on-year in February, with a three-month average of 2.3%. This is the fastest year-on-year in three months. Moreover, the three-month average matches the previous reading and even managed to beat the consensus that it would slow to +2.2%.

However, the faster wage growth was partially due to 13.1% surge in bonuses. If bonuses are stripped, then average weekly earnings only grew by 1.9%, which is the weakest reading in 11 months. Although the three-month average comes in at 2.2%, which is a ticke higher than the +2.1% consensus. Still, that’s the lowest three-month average reading in seven months.

In real terms (inflation is taken into account), real average weekly earnings (including bonuses) increased by 0.5%. Even better, the previous reading was revised from a 0.2% to a stagnant 0.0%. But if bonuses are excluded, then real average weekly earnings ell by 0.4% year-on-year. This is the first negative reading since August 2014.

Commodities rise, but base metals fall – Commodities staged another broad-based rally during the session. This time, however, base metals got left behind.

Precious metals got another round of buyers.

  • Gold was up by 0.28% to $1,277.75 per troy ounce
  • Silver was up by 0.54% to $18.352 per troy ounce

Oil benchmarks, meanwhile, extended their gains.

  • U.S. crude oil was up by 0.34% to $53.58 per barrel
  • Brent crude oil was up by 0.39% to $56.45 per barrel

As for base metals, they were down hard.

  • Copper was down by 1.27%% to $2.575 per pound
  • Nickel was down by 1.22% to $9,732.50 per dry metric ton

There was no clear reason for the broad-based commodities rally, since the U.S. Index was flat for the day when the session ended.

However, market analysts were quick to point to the prevalence of geopolitical as the reason why precious metals were in demand.  After all, precious metals are considered as traditional safe-havens.

Meanwhile, oil was in demand, market analysts say, because of speculation ahead of officials U.S. oil inventory numbers from the Energy Information Administration, as well as speculation that Saudi Arabia may lead the way for extending OPEC’s oil cut deal.

As to why base metals were in decline, some market analysts blamed that on profit-taking, as market players unwind bets because of all the geopolitical risks in recent days.

Risk aversion creeping in – European equity indices were in rally mode during the early part of the session, which implied that risk appetite was the dominant sentiment. As the session progressed, however, European equity indices began erasing their gains, which hints that risk aversion was making a comeback.

  • The pan-European FTSEurofirst 300 was still up by 0.20% to 1,504.42 but reached a high of 1,511,76 earlier.
  • Germany’s DAX was already down by 0.02 to 12,138.50 after reaching a high of 12,241.25 earlier.
  • The blue-chip Euro Stoxx 50 was already down by 0.05% to 3,467.50 after reaching a high of 3,499.00 earlier.

The returning risk-off vibes also pushed U.S. equity futures into the red.

  • S&P 500 futures were down by 0.18% to 2,346.75
  • Nasdaq futures were down by 0.15% to 5,393.38

Market analysts say the early risk-on vibes was due to higher oil prices, which propped up energy shares, and optimism that earnings season will bring goods news.

As for the returning risk-off vibes, no clear catalyst was identified, but some market analysts are pointing to the usual suspect. In other words, the prevalence of geopolitical risks in the aftermath of Trump’s missile strike after Syria’s Assad allegedly gassed beautiful babies.

Major Market Mover(s):

NZD – The Kiwi was the worst-performing currency of the session. Aside from the risk-off vibes, there wasn’t really anything else that could have quashed demand for the higher-yielding Kiwi.

NZD/USD was down by 21 pips (-0.30%) to 0.6919, NZD/CHF was down by 17 pips (-0.24%) to 0.6969, NZD/CAD was down by 25 pips (-0.28%) to 0.9218

GBP – Price action on some pound pairs was a bit choppy. Regardless, the pound ended up being the king of pips (or queen if you like) during the morning London session. And pound bulls can thank the latest U.K. jobs report for that, since the pound got a bullish infusion when the report was released, likely because real wage growth improved.

GBP/USD was up by 10 pips (+0.08%) to 1.2498, GBP/AUD was up by 28 pips (+0.17%) to 1.6695, GBP/NZD was up by 69 pips (+0.37%) to 1.8065

Watch Out For:

  • 12:30 pm GMT: U.S. import prices (-0.3% expected, 0.2% previous)
  • 2:00 pm GMT: BOC statement (overnight rate steady at 0.50% expected); read Forex Gump’s Trading Guide here, as well as his Economic Snapshot for Canada here.
  • 2:30 pm GMT: U.S. crude oil inventories (-0.7M expected, 1.6M previous)
  • 3:15 pm GMT: BOC press conference
  • 6:00 pm GMT: U.S. Federal budget balance (-$150.0B expected, -$192.0B previous)
  • 8:15 pm GMT: BOC Governor Stephen Poloz has a speech
  • 10:30 pm GMT: Business NZ manufacturing index (55.2 previous)