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The yen and the Swissy, which are both considered as safe-haven currencies, were the worst-performing currencies of the session, very likely because of the risk-on vibes.

The Loonie, meanwhile, managed to outperformed during today’s morning London session, very likely because of the rise in oil prices. In fact, the Loonie is now poised to become the best-performing currency of the day if this keep up.

  • German IFO current conditions: 124.1 vs. 123.3 expected, 123.2 previous
  • German IFO business climate: 115.1 vs. 114.5 expected, 114.6 previous
  • U.K. BBA mortgage approvals: 40.3K as expected  40.7K previous
  • Conservative and DUP strike a deal
  • U.S. durable goods orders coming up

Major Events/Reports

Conservatives and DUP strike a deal

Theresa May and DUP leader Arlene Foster announced earlier today that their respective parties have finally had a meeting of the minds.

The deal is that Theresa May will provide an additional £1 billion in financial support for Northern Ireland (was £2 billion originally).

And for its part, the DUP will use its 10 seats in Parliament to supplement Theresa May’s Conservative Party, which failed to get the 326 seats needed for a majority government. And for reference, the Conservative only control 317 seats.

The 10 seats won by the DUP, in effect, will be used to get the majority needed in key votes such Brexit, the Queen’s Speech this Thursday, and the budget (among others).

This deal is not a coalition deal, though, but a so-called “confidence and supply” deal. Also, this major development gave the pound a broad-based push higher, but there was no follow-through buying, so the pound ended up mixed for the session, with some pound pairs bound practically range-bound.

Most commodities rise, but precious metals fall

Most commodities extended last Friday’s recovery during today’s morning London session. Precious metals got left behind, though.

Base metals were in positive territory.

  • Copper was up by 0.09% to $2.637 per pound
  • Zinc was up by 0.66% to $2,720.00 per dry metric ton

Oil benchmarks also did well enough.

  • U.S. WTI crude oil was up by 0.35% to $43.16 per barrel
  • Brent crude oil was up by 0.20% to $45.84 per barrel

Precious metals got hammered hard, however.

  • Gold was down by 1.11% to $1,242.48 per troy ounce
  • Silver was down by 1.09% to $16.466 per troy ounce

Market analysts couldn’t pinpoint a reason for the broad-based rise in commodity prices, but bargain buying after last week’s commodities rout is definitely a possibility.

In fact, some market analysts are pointing to bargain buying as the reason for the recovery in oil prices during the session since there wasn’t really any major catalyst.

As for the plunge in precious metals, the risk-friendly environment may have helped to dampen safe-haven demand for precious metals.

However, some market analysts also point to a possible “fat finger” moment since gold and silver apparently got sold off on very large volume earlier only to be quickly bought up later.

Optimistic start in Europe

Europe is starting the new trading week on an upbeat mood since European equity indices were mostly in positive territory.

  • The pan-European FTSEurofirst 300 was up by 0.87% to 1,536.84
  • Germany’s DAX was already up by 0.80% to 12,835.00
  • The blue-chip Euro Stoxx 50 was up by 0.95% to 3,577.50

U.S. equity futures also got a lift from all that optimism in Europe.

  • S&P 500 futures were up by 0.26% to 2,441.25
  • Nasdaq futures were up by 0.45% to 5,838.12

Market analysts attributed the risk-on vibes to the strong performance of banking shares after news got around over the weekend that Italy successfully concluded a deal to wind up two embattled banks under relatively more favorable terms, albeit at the expense of the common Italian taxpayer.

Major Market Mover(s):

CHF & JPY

The Swissy and the yen both got clobbered during today’s morning London session. There were no direct catalysts, but it’s highly likely that the two safe-haven currencies got weighed down by the risk-on vibes.

USD/CHF was up by 34 pips (+0.35%) to 0.9731, EUR/CHF was up by 27 pips (+0.25%) to 1.0880, AUD/CHF was up by 21 pips (+0.29%) to 0.7368

USD/JPY was up by 36 pips (+0.33%) to 111.65, AUD/JPY was up by 22 pips (+0.26%) to 84.55, NZD/JPY was up by 22 pips (+0.28%) to 81.25

CAD

The Loonie was the best-performing currency of the session. Heck, the Loonie is even the best-performing currency of the day (so far). And Loonie bulls can probably thank the rise in oil prices for that.

USD/CAD was down by 19 pips (-0.14%) to 1.3237, GBP/CAD was down by 46 pips (-0.28%) to 1.6849, EUR/CAD was down by 35 pips (-0.24%) to 1.4801

Watch Out For:

  • 12:30 pm GMT: Headline (-0.5% expected, -0.8% previous) and core (0.4% expected, -0.5% previous) readings for U.S. durable goods orders
  • 5:30 pm GMT: ECB Overlord Draghi will speak