Europe is starting the new trading week with some wonky price action since the Swissy outperformed despite signs of risk-taking while the pound tumbled, even though there were no apparent catalysts.
- Euro Zone final CPI y/y: unchanged at 1.3% as expected
- Euro Zone final core CPI y/y: unchanged at 1.1% as expected
Brexit talks begin
FYI, Brexit Secretary David Davis met with his E.U. counterpart, Michel Barnier, earlier today to start the second round of Brexit negotiations in Belgium.
This week’s round is expected to last for four days. And things could potentially get dicey since the agenda this week covers the rights of expatriates and the E.U.’s demand that the U.K. pay up before it can leave the Union.
Commodities starting the week on a high note
Last week’s commodities rally isn’t out of steam just yet it seems since commodities were broadly in the green during today’s morning London session.
Market analyst attributed today’s broad-based commodities rally on bargain buying due to last week’s Greenback weakness and expectations of higher demand due to China’s better-than-expected GDP reading from the earlier Asian session.
Precious metals were in high demand despite signs of returning risk appetite.
- Gold was up by 0.55% to $1,234.31 per troy ounce
- Silver was up by 1.21% to $16.125 per troy ounce
Base metals clearly outperformed.
- Copper was up by 1.04% to $2.719 per pound
- Nickel was up by 1.26% to $9,657.50 per dry metric ton
Oil benchmarks were lagging behind but still in the green regardless.
- U.S. WTI crude oil was up by 0.02% to $46.55 per barrel
- Brent crude oil was up by 0.20% to $49.01 per barrel
Signs of risk-taking to start the week
European equity indices had a mixed start but many opened lower. However, there were some signs of risk-taking since European equity indices began erasing their losses as the session progressed.
There was no clear reason for the early risk aversion. As for the later signs of risk-taking, market analysts attributed that to the commodities rally since mining shares were the top performers.
- The pan-European FTSEurofirst 300 was up by 0.14% to 1,522.52
- Germany’s DAX was still down by 0.05% to 12,622.50 but reached a low of 12,541.50 earlier
- The blue-chip Euro Stoxx 50 was up by 0.06% to 3,524.50
U.S. equity futures were also hinting that risk appetite was the more dominant sentiment.
- S&P 500 futures were up by 0.07% to 2,457.75
- Nasdaq futures were up by 0.17% to 5,853.25
Major Market Mover(s):
The pound tumbled across the board during today’s Monday morning London session, even though there were no apparent catalysts.
This wonky price action was likely due to profit-taking by bulls after the pound’s strong performance last week. However, some market analysts say that the pound’s weakness today was due to renewed Brexit-related jitters since four days of Brexit talks just got underway today.
GBP/USD was down by 36 pips (-0.28%) to 1.3059, GBP/CHF was down by 90 pips (-0.71%) to 1.2548, GBP/AUD was down by 86 pips (-0.52%) to 1.6685
The safe-haven Swissy had some rather unusual price action during today’s morning London session since it was the best-performing currency despite the signs of risk-taking.
There are no clear reasons for the Swissy’s strength, although profit-taking by Swissy shorts is a possibility since the Swissy was the second worst-performing currency last week.
But then again, if focus is switching back to Brexit, then it’s possible that Brexit-related uncertainty was fueling demand for the Swissy.
USD/CHF was down by 41 pips (-0.43%) to 0.9608, EUR/CHF was down by 38 pips (-0.35%) to 1.1014, NZD/CHF was down by 23 pips (-0.32%) to 0.7047
Watch Out For:
- 12:30 pm GMT: Canada’s foreign security purchases ($9.78B expected, $10.60B previous)
- 12:30 pm GMT: U.S. Empire State manufacturing index (15.2 expected, 19.8 previous)