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The safe-haven yen was the best-performing currency of the session, even though there were signs that risk appetite was beginning to win out near the end. But then again, bond yields continued to fall, which likely gave the yen a bullish boost.

  • National Day holiday in France today
  • Italian trade balance: €4.34B vs. €2/43B expected, €3.60B previous
  • Euro Zone trade balance: €19.7B vs. €20.3B expected, €18.6B previous
  • U.S. CPI and retail sales report on tap

Major Events/Reports

Commodities still in rally mode

Commodities continued their upward trek for yet another day. And this time, oil, which was left behind yesterday, was finally along for the ride.

Precious metals found more buyers.

  • Gold was up by 0.22% to $1,221.75 per troy ounce
  • Silver was up by 0.12% to $15.906 per troy ounce

Base metals are still broadly in positive territory.

  • Copper was up by 0.22% to $2.690 per pound
  • Nickel was up by 0.38% to $9,237.50 per dry metric ton

Unlike yesterday, oil benchmarks were marching to the beat of the same drummer this time.

  • U.S. WTI crude oil was up by 0.74% to $45.06 per barrel
  • Brent crude oil was up by 0.72% to $47.26 per barrel

The broad-based commodities rally was probably sustained by Greenback weakness. After all, globally-traded commodities, which are priced in U.S. dollars, become relatively cheaper when the Greenback retreats.

And for reference, the U.S. dollar index was down by 0.16% to 95.41 for the day when the session ended.

Other than that, market analysts also pointed to upbeat Chinese data from yesterday as being supportive of demand for base metals.

As for the rise in oil prices today, market analysts also pointed to Chinese data and Greenback weakness, but they also referred to the large draw in U.S. oil inventories, according to the EIA’s data, as well as oil production issues in Nigeria.

Cautious optimism in Europe

European equity indices were slightly in the red at first, but signs of cautious optimism slowly crept back into the markets so most European equity indices were just barely in positive territory when the session ended.

  • The pan-European FTSEurofirst 300 was up by 0.01% to 1,519.03
  • Germany’s DAX was up by 0.02% to 12,654.75
  • The blue-chip Euro Stoxx 50 was up by 0.04% to 3,529.20

Market analysts attributed the cautious optimism to support provided by mining shares, so overall risk sentiment appears linked to the ongoing commodities rally.

Global bond yields slide again

Global bond yields recovered because of ECB-related rumors, only to get slapped lower again when Yellen gave another somewhat cautious speech. And, well, bond yields continued to fall during the morning London session.

  • French 10-year bond yield down by 3.83% to 0.847%
  • German 10-year bond yield down by 4.64% to 0.575%
  • U.K. 10-year bond yield down by 0.77% to 1.292%
  • U.S. 10-year bond yield down by 0.69% to 2.332%

Major Market Mover(s):

JPY

The safe-haven yen was the best-performing currency of the session. There were no apparent catalysts, but the yen likely got a bullish boost because of the slide in global bond yields.

USD/JPY was down by 25 pips (-0.22%) to 113.06, EUR/JPY was down by 22 pips (-0.17%) to 129.08, CHF/JPY was down by 48 pips (-0.42%) to 116.77

Watch Out For:

  • 12:30 pm GMT: Headline (+0.1%, -0.3% previous) and core (+0.2%, -0.3% previous) readings for U.S. retail sales
  • 12:30 pm GMT: Headline (+0.1%, -0.1% previous) and core (+0.2% expected, +0.1% previous) readings for U.S. CPI; read Forex Gump’s Preview here
  • 1:15 pm GMT: U.S. capacity utilization rate (76.7% expected, 76.6% previous)
  • 1:15 pm GMT: U.S. industrial production (0.3% expected, 0.0% previous)
  • 1:30 pm GMT: Dallas Fed President Robert Kaplan will speak
  • 2:00 pm GMT: University of Michigan’s preliminary consumer sentiment (95.1 expected, same as previous)