Most pound pairs were range-bound for the session before jumping higher near the end as BOE Chief Economist Haldane’s scheduled speech drew near.
The risk-on vibes and surge in bond yields, meanwhile, apparently weighed down on the safe-haven yen, which found itself at the bottom of the heap.
- German import prices m/m: -1.1% vs. -0.7% expected, -1.0% previous
- German import prices y/y: 2.5% vs. 2.9% expected, 4.1% previous
- French PPI m/m: -0.4% expected, -0.6% previous
- French PPI y/y: 1.4% expected, 2.1% previous
- German IFO current conditions: 125.4 vs. 123.8 expected, 124.1 previous
- German IFO business climate: 116.0 vs. 114.9 expected, 115.1 previous
- U.K. CBI industrial order expectations: 10 vs. 12 expected, 16 previous
Commodities climb higher but precious metals fall
The commodities rally continued during today’s morning London session. However, the rally wasn’t as broad-based compared to yesterday’s rally since precious metals got left behind.
Market analysts say that the commodities rally was due to strong Chinese demand (base metals in particular), as well as the Greenback’s recent weakness, which has made globally-traded commodities relatively cheaper.
And for reference, the U.S. dollar index was down by 0.30% to 93.54 for the day when the session ended.
Base metals were in high demand.
- Copper was up by 2.61% to $2.808 per pound
- Nickel was up by 1.95% to $9,947.50 per dry metric ton
Oil benchmarks also performed rather well.
- U.S. WTI crude oil was up by 1.70% to $47.13 per barrel
- Brent crude oil was up by 1.54% to $49.35 per barrel
Precious metals fared poorly, likely because of the risk-on vibes.
- Gold was down by 0.28% to $1,250.83 per troy ounce
- Silver was down by 0.91% to $16.293 per troy ounce
Risk sentiment improves
Risk-taking was the name of the game during today’s morning London session, with almost all the major European equity indices well in the green by the end of the session.
Market analysts attributed the risk-friendly environment to various factors which include positive earnings reports, the commodities rally, and overall optimism due to the perceived reflation in Europe.
- The pan-European FTSEurofirst 300 was up by 0.84% to 1,501.78
- Germany’s DAX was up by 0.72% to 12,297.25
- The blue-chip Euro Stoxx 50 was up by 1.33% to 3,493.00
U.S. equity futures were also in positive territory.
- S&P 500 futures were up by 0.23% to 2,474.25
- Nasdaq futures were up by 0.11% to 5,940.25
Global bond yields surge
Another sign of the risk-friendly environment is that global bond yields surged as market players dumped bonds in favor of riskier assets and/or financial instruments.
- French 10-year bond yield up 4.74% to 0.782%
- German 10-year bond yield up by 5.79% to 0.530%
- U.K. 10-year bond yield up by 1.17% to 1.207%
- U.S. 10-year bond yield up by 1.52% to 2.287%
- Canadian 10-year bond yields up by 2.45% to 1.971%
Major Market Mover(s):
The pound was steady but mixed for most of the session before getting a broad-based bullish boost near the end. No clear reason why, but preemptive positioning by pound bulls and/or unwinding by pound bears ahead of BOE Haldane’s speech is a possibility.
GBP/USD was up by 37 pips (+0.28%) to 1.3066, GBP/JPY was up by 111 pips (+0.77%) to 145.62, GBP/CHF was up by 53 pips (+0.44%) to 1.2383
The yen suffered a lot during today’s morning session, very likely because of the risk-on vibes and surge in global bond yields.
USD/JPY was up by 54 pips (+0.49%) to 111.45, EUR/JPY was up by 69 pips (+0.54%) to 130.03, CAD/JPY was up by 42 pips (+0.48%) to 89.14
Watch Out For:
- 1:00 pm GMT: U.S. HPI (0.5% expected, 0.7% previous)
- 2:00 pm GMT: CB’s U.S. consumer confidence (116.5 expected, 118.9 previous)
- 2:00 pm GMT: Richmond Fed’s manufacturing index (steady at 7 expected)
- 5:00 pm GMT: BOE MPC Member Andy Haldane will give a speech
- 8:15 pm GMT: RBNZ Assist Governor McDermott will speak
- 10:45 pm GMT: New Zealand’s trade balance ($147M expected, 103M previous)