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Not much in terms of economic reports or market-moving news during today’s morning London session, so trading conditions were rather tight. However, the session wasn’t a complete slumber party since the Loonie found buyers, very likely because of the recovery in oil prices.

  • Swiss trade balance: CHF 3.40B vs. CHF 2.44B expected, CHF 1.96B previous
  • CBI’s U.K. industrial order expectations: 16 vs. 7 expected, 9 previous
  • Canada’s retail sales report coming up

Major Events/Reports

Conservatives and DUP expect a deal soon?

A BBC report cited Sir Jeffrey Donaldson, a senior member of the Democratic Unionist Party (DUP), as saying that there’s a “very good” chance that Theresa May’s Conservative Party and the DUP will be able to hammer out a deal by next week, adding that “the sooner the better“.

The ECB’s economic bulletin

Earlier today, the ECB released its economic bulletin – the data set which ECB officials used when formulating their June 8 ECB monetary policy decision and statement.

It’s not really a market moving report since ECB usually gives the broad strokes during the ECB statement itself, as well as during the presser.

However, the bulletin does provide some of the details for those who are interested.

And looking at the details, the ECB points out that “Improvements in euro area labour markets have boosted households’ real disposable incomes and facilitated consumer spending.”

Also, “Improving bank lending conditions, reinforced by the ECB’s monetary policy measures, have also remained supportive of household spending.”

Furthermore, “The rebound in euro area housing markets is increasingly supporting growth momentum.

Business investment is also “continuing its gradual recovery” and this recovery “is expected to continue.”

Meanwhile, “An improved external environment has led to a rebound in euro area export momentum.”

Given all that, the ECB concluded that “incoming data point to solid growth in the second quarter of 2017,” which is why the ECB announced that it upgraded its growth projections during the June 8 ECB statement.

Commodities recover

After sliding for the past three days, commodities staged a broad-based recovery during today’s morning London session.

Oil benchmarks performed well.

  • U.S. WTI crude oil was up by 0.73% to $42.84 per barrel
  • Brent crude oil was up by 1.00% to $45.27 per barrel

Precious metals also had a good showing.

  • Gold was up by 0.57% to $1,252.87 per troy ounce
  • Silver was up by 1.15% to $16.562 per troy ounce

Base metals didn’t do as well but were still mostly in the green.

  • Copper was up by 0.15% to $2.606 per pound
  • Nickel was up by 0.11% to $8,982.50 per dry metric ton

Aside from profit-taking after several days of declines, there wasn’t really much in terms of catalysts, though. Also, the U.S. dollar index was up by 0.06% to 97.28 for the day when the session ended.

Returning appetite for risk?

Most European equity indices opened lower and then proceeded to sink even lower. However, signs of risk appetite began to show up later when Equity indices started to claw their way back up again.

  • The pan-European FTSEurofirst 300 was down by 0.27% to 1,522.96 but off its low of 1,517.33
  • Germany’s DAX was already up by 0.04% to 12,778.25 after reaching a low of 12,716.00 earlier
  • The blue-chip Euro Stoxx 50 was down by 0.35% to 3,541.50 but off its low of 3,525.50

Market analysts attributed the early risk-off vibes on bearish pressure on energy shares due to the earlier slide in oil prices. And since oil prices rebounded during the course of the session, European equity indices naturally came off their lows as well.

Major Market Mover(s):

CAD

The Loonie was the only real mover of the session, very likely because of the rise in oil prices during the course of the session. However, it’s also possible that we’re seeing some preemptive buying ahead of Canada’s retail sales report.

USD/CAD was down by 23 pips (-0.18%) to 1.3304, CAD/JPY was up by 29 pips (+0.35%) to 83.67, CAD/CHF was up by 28 pips (+0.38%) to 0.7318

Watch Out For:

  • 12:30 pm GMT: Headline (+0.3% expected, +0.7% previous) and core (+0.7% vs. -0.2% previous) readings for Canada’s retail sales; read Forex Gump’s write-up on that here
  • 12:30 pm GMT: U.S. initial jobless claims (241K expected, 237K previous)
  • 1:00 pm GMT: U.S. HPI (0.4% expected, 0.6% previous)
  • 2:00 pm GMT: Euro Zone consumer confidence (steady at -3 expected)
  • 2:00 pm GMT: CB’s U.S. leading index (0.4% expected, 0.3% previous)
  • 2:00 pm GMT: U.S. Fed Governor Jerome Powell will testify before the U.S. Senate
  • 6:00 pm GMT: BOE MPC Member Kristin Forbes will give a speech