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Not much on the docket for today’s morning London session session. Still, there was decent enough price action since the pound managed to find some buyers while the Swissy got whupped yet again.

As for the other currencies, the comdolls (AUD, NZD, CAD) were showing weakness, very likely because of the returning risk-off vibes and commodities rout, although there was also an earthquake that caused the Kiwi to drop sharply lower to end up as the second weakest currency of the session.

The yen, meanwhile, was the second best-performing currency of the morning London session, likely because of the returning risk aversion.

  • Italian industrial production m/m: 0.7% vs. 0.5% expected, -0.5% previous
  • NFIB’s U.S. small business index: 103.6 vs. 104.4 expected, 104.5 previous

Major Events/Reports

Big earthquake near New Zealand

Word on the wire is that a magnitude 6.8 earthquake struck near the Auckland islands in New Zealand. Thankfully, there was no tsunami and it looks like there were no reported deaths, major injuries, or major property damage. The earthquake caused the Kiwi to slip, though.

Commodities resume slide

Commodities broadly turned lower during the session after a brief recovery during the earlier session.

Precious metals were in negative territory again, even though risk aversion prevailed.

  • Gold was down by 0.27% to $1,209.89 per troy ounce
  • Silver was down by 0.79% to $15.506 per troy ounce

Base metals were printing losses once more.

  • Copper was down by 0.17% to $2.643 per pound
  • Zinc was down by 0.08% to $2,774.00 per dry metric ton

Oil benchmarks took more hits and is still the worst-performing commodity.

  • U.S. WTI crude oil was down by 1.01% to $43.95 per barrel
  • Brent crude oil was down by 1.07% to $46.38 per barrel. Market analysts are still blaming the commodities rout on the stronger Greenback. And for reference, the U.S. dollar index was up slightly by 0.06% to 95.87 for the day when the session ended.

Although some market analysts also blamed the slide in oil prices to the downgraded price projections for oil by the major banks.

Other market analysts, meanwhile, pointed to rumors that Saudi Arabia supposedly raised its oil output by 190K barrels per day to 10.07 million in June.

Hello darkness my old friend

European equity indices intitially had a good run, but it soon became clear that feelings of doom and gloom were returning since European equity indices began returning their gains, with some already in the red by the end of the session.

  • The pan-European FTSEurofirst 300 was down by 0.41% to 1,494.61
  • Germany’s DAX was still up by 0.10% to 12,461.75 but off its high of 12,538.50
  • The blue-chip Euro Stoxx 50 was down by 0.24% to 3,470.50

U.S. equity futures also felt the heat.

  • S&P 500 futures were down by 0.10 to 2,422.00
  • Nasdaq futures were down by 0.09 to 5,688.88

Market analysts said that the early risk-on mood was due to strong performance by automobile, banking, and mining shares.

However, poor earnings for retail estate and defensive shares later caused overall risk sentiment to sour. Moreover, mining shares began giving back their gains when commodities turned lower during the session.

Major Market Mover(s):

GBP

The pound was the best-performing currency of the session, even though there were no apparent catalysts. However, some market analysts attributed demand for the pound to optimism that the BOE has retained its hawkish bias, as well as expectations that BOE speakers this week will confirm this.

GBP/USD was up by 27 pips (+0.21%) to 1.2905, GBP/NZD was up by 70 pips (+0.40%) to 1.7882, GBP/CHF was up by 46 pips (+0.37%) to 1.2499

CHF

The Swiss franc was the worst-performing currency of the session, which is weird because there was no apparent catalyst and risk aversion was making a comeback during the session. Maybe the SNB was sneakily weakening the Swissy again?

USD/CHF was up by 16 pips (+0.17%) to 0.9684, EUR/CHF was up by 21 pips (+0.20%) to 1.1034, CHF/JPY was down by 31 pips (-0.27%) to 118.01

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (200K expected, 195K previous)
  • 12:30 pm GMT: BOE Deputy Governor Ben Broadbent will be speaking
  • 1:30 pm GMT: CB’s U.K. leading index (-0.3% previous)
  • 2:00 pm GMT: U.S. JOLTS job openings (5.98M expected, 6.04M previous)
  • 2:00 pm GMT: U.S. final wholesale inventories (no change from 0.3% expected)
  • 4:30 pm GMT: U.S. Fed Governor Lael Brainard will speak