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Trading conditions were a bit tight and price action was choppy for the most part. The Aussie did end up broadly higher against its peers, though. The yen, meanwhile, got slapped broadly lower.

  • GFK’s German consumer climate: 10.6 vs. 10.5 expected, 10.4 previous
  • U.K. net consumer credit: £1.7B vs. £1.4B expected, £1.5B previous
  • U.K. mortgage approvals: 65.2k vs. 64.0K expected, 64.6K previous
  • Euro Zone consumer confidence: unchanged at -1.3 as expected
  • Euro Zone industrial sentiment: 4.5 vs. 2.8 expected, same as previous
  • Business climate in the Euro Zone: 1.15 vs. 0.94 expected, 0.90 previous
  • German HICP m/m: 0.2% vs. 0.0% expected, -0.2% previous
  • German HICP y/y: 1.6% vs. 1.4% expected, 1.5% previous

Major Events/Reports

Tight trading conditions

The yen was the only real mover during the session, although the Aussie did show some broad-based strength, so we might as well consider the Aussie as a mover also.

There’s no clear reason as to why volatility and directional movement got sapped during the session, however. Although it is possible that the market is in a consolidation mood after yesterday’s central bankers gaves us a lot to chew on.

Another possibility is that market players are waiting for the vote on the Queen’s Speech later. By the way, Forex Gump has a write-up on that. You can read it here, if you’re interested.

Oil extends gains

Oil benchmarks extended yesterday’s gains and clearly outperformed among the various commodities.

  • U.S. WTI crude oil was up by 1.18% to $45.27 per barrel
  • Brent crude oil was up by 1.22% to $48.12 per barrel

Market analysts attributed oil’s sustained rally to U.S. oil production unexpectedly dropping by 100K barrels per day and yesterday’s U.S. crude oil inventory data.

More risk aversion in Europe

Risk aversion prevailed in Europe, so European equity indices wallowed in negative territory once more.

  • The pan-European FTSEurofirst 300 was down by 0.24% to 1,514.88
  • Germany’s DAX was already down by 0.49% to 12,585.75
  • The blue-chip Euro Stoxx 50 was down by 0.57% to 3,517.50

Market analysts point out that tech shares still accounted for most of the losses, with the global cyber attack from a couple of days back still being cited for the downbeat sentiment, particularly for cybersecurity shares.

Global bond yields climb some more

Even though risk aversion prevailed in the European equities market, bond yields were broadly in the green during the session. And market analysts pointed mainly to yesterday’s hawkish statements from top central bankers.

  • French 10-year bond yield up by 10.27% to 0.781%
  • German 10-year bond yield up by 24.36% to 0.439%
  • U.K. 10-year bond yield up by 5.70% to 1.224%
  • Canadian 10-year bond yield up by 4.93 to 1.704%
  • U.S. 10-year bond yield up by 2.51% to 2.279%

Major Market Mover(s):

JPY

The yen was the only real mover during the session. However, the safe-haven yen ended up as the worst-performing currency of the session, even though risk aversion prevailed. And the very likely reason for this weirdness is that bond yields were surging during the session.

USD/JPY was up by 48 pips (+0.43%) to 112.68, CHF/JPY was up by 45 pips (+0.38%) to 117.57, AUD/JPY was up by 52 pips (+0.61%) to 86.49

AUD

The Aussie slightly but broadly extended its gains from the earlier Asian session. No clear reason why, but the earlier rise in iron ore prices very likely sustained demand for the Aussie.

AUD/USD was up by 11 pips (+0.14%) to 0.7675, AUD/CAD was up by 20 pips (+0.21%) to 1.0001, AUD/NZD was up by 31 pips (+0.30%) to 1.0522

Watch Out For:

  • 12:30 pm GMT: U.S. final Q1 GDP (unchanged at 1.2% expected)
  • 12:30 pm GMT: U.S. initial jobless claims (241K expected, same as previous)
  • 10:45 pm GMT: New Zealand’s building consents (-7.6% previous)
  • British MPs expected to vote on Queen’s Speech later; read Forex Gump’s write-up on that here