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Price action was a bit wonky during today’s morning London session. However, the most noteworthy currency is the Swissy since it got hit by another wave of sellers, even though there were signs of returning risk aversion.

  • GFK’s German consumer climate: 10.8 vs. 10.7 expected, 10.6 previous
  • Euro Zone Spanish jobless rate: 17.2% vs. 17.8% expected, 18.8% previous
  • Euro Zone private loans y/y: 2.6% vs. 2.7% expected, 2.6% previous
  • U.K. CBI realized sales: 22 vs. 10 expected, 12 previous

Major Events/Reports

Another round of CHF selling

I noted in yesterday’s London session recap that the Swissy got hammered across the board. Well, the same thing happened again during today’s morning London session. And the weird thing today is that risk aversion was making a comeback, which should have boosted the Swissy. Instead, the Swissy was dumped pretty hard and was the worst performing currency of the session.

The euro and Swissy were still dancing in tandem, so you already know that the euro was showing signs of weakness during the session, although the euro’s price action was rather choppy during the session.

However, the Swissy was just much weaker. Heck, just look at the highlighted parts below.

USD/CHF (Black) vs. EUR/USD (Red, Inverted): 15-Minute Chart
USD/CHF (Black) vs. EUR/USD (Red, Inverted): 15-Minute Chart
GBP/CHF (Black) vs. EUR/GBP (Red, Inverted): 15-Minute Chart
GBP/CHF (Black) vs. EUR/GBP (Red, Inverted): 15-Minute Chart

Market analysts are offering a host of reasons for the Swissy’s weakness, with some pointing to technicals while others pointed to monetary policy divergence.

Other analysts with a longer-term view were even saying that the safe-haven trade on the Swissy is beginning to unwind now that the Euro Zone has recovered enough.

And remember, there was a rush for the Swissy during the height of the European debt crisis, which ultimately forced the SNB to abandon its floor on EUR/CHF, causing the Swissy to appreciate tremendously. And as a result, the SNB began repeating like a parrot that the Swissy is significantly overvalued while intervening in the forex market to weaken the Swissy.

Speaking of the SNB, SNB meddling is also always a possibility.

Commodities climb some more but oil slips

Most commodities are still in rally mode. And this time precious metals decided to join in. However, oil got left behind in exchange.

Precious metals outperformed, likely because of the returning risk-off vibes.

  • Gold was up by 1.13% to $1,263.51 per troy ounce
  • Silver was up by 1.70% to $16.739 per troy ounce

Base metals had another good run.

  • Copper was up by 0.63% to $2.890 per pound
  • Zinc was up by 0.25% to $2,813.50 per dry metric ton

The oil rally ran out of steam, however.

  • U.S. WTI crude oil was down by 0.84% to $48.34 per barrel
  • Brent crude oil was down by 0.75% to $50.59 per barrel

The Greenback was actually in recovery mode during the session and the U.S. dollar index was even up by 0.26% to 93.53 for the day when the session ended.

Even so, market analysts are attributing the sustained commodities rally on the Greenback’s recent weakness. After all, the Greenback has yet to recovery from the broad-based selloff due to yesterday’s FOMC statement.

As to why oil was in retreat, there was no apparent catalysts but profit-taking after U.S. oil inventories showed a draw (as expected) is a possibility.

Risk aversion finally returns

Signs of risk aversion finally made a comeback during today’s morning London session since most of the major European equity indices began erasing their earlier gains and most were already in the red when the session ended.

Market analysts were quick to pin the blame on poor earnings results for the sour mood during today’s session.

  • The pan-European FTSEurofirst 300 was already down by 0.03% to 1,503.75
  • Germany’s DAX was already down by 0.43% to 12,252.50
  • The blue-chip Euro Stoxx 50 was still by 0.02% to 3,489.00 but off its high at 3,506.00

Major Market Mover(s):

 CHF

The Swissy was the worst-performing currency of the session yet again, even though there were signs of returning risk aversion in Europe.

As mentioned earlier, various reasons were cited by market analysts but nobody honestly knows. Also, SNB meddling is always a possibility.

Anyhow, whatever was driving the Swissy’s price action, the fact remains that the Swissy was the worst-performing currency of the session.

USD/CHF was up by 95 pips (+1.01%) to 0.9606, EUR/CHF was up by 77 pips (+0.69%) to 1.1233, NZD/CHF was up by 55 pips (+0.77%) to 0.7222

GBP

The Swissy was not the only one showing wonky price action since the pound was also had a rather wonky performance in that it was the best-performing currency of the session, even though there were no direct catalysts for the pound’s broad-based strength.

Some market analysts pointed to Greenback weakness pushing GBP/USD higher and dragging other pound pairs higher with it. However, I’m reluctant to agree with that since the Greenback was actually in recovery mode during the morning London session.

GBP/USD was up by 4 pips (+0.03%) to 1.1314, GBP/JPY was up by 40 pips (+0.27%) to 146.44, GBP/CHF was up by 123 pips (+0.99%) to 1.2626

USD

After getting dumped in the wake of the FOMC statement, the Greenback finally found some respite during the morning London session and was able to lick its wounds. Aside from profit-taking by shorts, there wasn’t really much else that could have fueled the broad-based recovery.

EUR/USD was down by 36 pips (-0.31%) to 1.1693, AUD/USD was down by 36 pips (-0.45%) to 0.8000, NZD/USD was down by 17 pips (-0.23%) to 0.7518

Watch Out For:

  • 12:30 pm GMT: Headline (3.5% expected, -0.8% previous) and core (0.4% expected, 0.3% previous) readings for U.S. durable goods orders
  • 12:30 pm GMT: U.S. goods trade balance (-$65.0B expected, -$65.9B previous)
  • 12:30 pm GMT: U.S. wholesale inventories (0.3% expected, 0.4% previous)