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Trading conditions were a bit subdued during Monday’s morning London session but there was still enough action to keep the session interesting.

The euro, for one, closed the session on a high note across the board. The commodities rout and risk-off vibes, meanwhile, apparently gave all the comdolls (NZD, AUD, CAD) the boot, especially the higher-yielding Kiwi.

  • German industrial production m/m: -1.1% vs. 0.2% expected, 1.2% previous
  • Swiss foreign currency reserves: CHF 714B vs. CHF 694B previous
  • Swiss CPI m/m: -0.3% as expected, -0.1% previous
  • U.K. Halifax HPI m/m: 0.4% vs. 0.3% expected, -0.9% previous
  • Euro Zone Sentix investor confidence: 27.7 vs. 27.8 expected, 28.3 previous

Major Events/Reports

Commodities crunched

Most commodities were in positive territory during the earlier Asian session. That changed during the morning London session, though, since commodities gave back their gains and were mostly in negative territory for the day when the session ended.

Market analysts couldn’t pinpoint a reason for the broad-based slide. And we can’t really point to Greenback strength since the U.S. dollar index was down by 0.12% to 93.26 for the day when the session ended.

Market analysts do have a reason for the extra hard drop in oil prices, though, namely renewed concern over higher OPEC and U.S. oil output.

The risk-off vibes couldn’t save precious metals from tanking.

  • Gold was down by 0.27% to $1,261.20 per troy ounce
  • Silver was down by 0.70% to $16.138 per troy ounce

Base metals were mixed and some were still clinging to their gains but many were already in negative territory.

  • Copper was down by 0.03% to $2.886 per pound
  • Zinc was down by 0.07% to $20,592.50 per dry metric ton

Oil benchmarks were down extra hard.

  • U.S. WTI crude oil was down by 1.39% to $48.89 per barrel
  • Brent crude oil was down by 1.37% to $51.70 per barrel

Gloomy day in Europe

Europe is starting the new trading with some risk aversion since the major European equity indices erased their earlier gains and were in the red by the end of the session.

And according to market analysts, the early risk-on mood was due to the commodities rally, which underpinned mining shares.

However, commodities reversed course during the, er, course of the European session, so the commodities rout is also the likely reason for the souring sentiment.

Other than that, the stronger euro was also cited as being negative for European exporters, which also likely contributed to the downbeat mood.

  • The pan-European FTSEurofirst 300 was down by 0.24% to 1,500.51
  • Germany’s DAX was down by 0.51% to 12,235.50
  • The blue-chip Euro Stoxx 50 was down by 0.23% to 3,500.50

Major Market Mover(s):

EUR

The euro scored wins across the board to end up as the best-performing currency of the session. In fact, the euro is also currently the best-performing currency of the day (so far).

There were no apparent catalysts for the euro’s broad-based strength since the low-tier reports that were released during the session were actually a bit disappointing.

However, it’s possible that the euro is still being underpinned by demand related to expectations of a future tightening move from the ECB.

EUR/USD was up by 18 pips (+0.16%) to 1.1802, EUR/AUD was up by 40 pips (+0.27%) to 1.4915, EUR/NZD was up by 65 pips (+0.41%) to 1.6030

Comdolls

The comdolls (NZD, AUD, CAD) were the main losers of today’s morning London session, very likely because of the commodities rout and risk-off vibes in Europe.

And among the three, the Kiwi’s weakness is really noteworthy since the Kiwi has actually been bleeding out since the earlier Asian session, shortly after the RBNZ’s inflation expectations survey was released (it showed a dip from 2.2% to 2.1%).

Not only that, the Kiwi is also the polar opposite of the euro since the Kiwi is the worst-performing currency of the day (so far).

Aside from the dip in inflation expectations, commodities slide, and risk-off-vibes, it’s also possible that Kiwi bulls are pushing the “eject” button ahead of the RBNZ statement, making the Kiwi extra weak.

Also, interest rate differentials may also be in play since odds for a December Fed rate hike apparently got a boost from last Friday’s NFP report.

NZD/USD was down by 19 pips (-0.27%) to 0.7361, NZD/CHF was down by 17 pips (-0.24%) to 0.7161, NZD/JPY was down by 17 pips (-0.20%) to 81.58

AUD/USD was down by 10 pips (-0.13%) to 0.7912, AUD/JPY was down by 6 pips (-0.07%) to 87.69, AUD/CHF was down by 8 pips (-0.11%) to 0.7697

USD/CAD was up by 18 pips (+0.14%) to 1.2680, EUR/CAD was up by 42 pips (+0.28%) to 1.4965, GBP/CAD was up by 28 pips (+0.17%) to 1.6546

Watch Out For:

  • 2:00 pm GMT: U.S. Fed’s labor market conditions index (1.5 previous)
  • 5:25 pm GMT: Minneapolis Fed President Neel Kashkari will speak
  • 7:00 pm GMT: U.S. consumer credit ($15.6B expected, $18.4B previous)