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Price action was rather wonky during today’s morning London session since the Aussie just shrugged off the risk-off vibes and commodities rout to come out as the top dog of the session.

The wonky price action doesn’t stop there since the pound slumped without any apparent catalysts.

The Loonie also encountered selling pressure near the end of the session, although that’s not as wonky since oil turned lower during the course of the session.

Finally, the yen is also noteworthy since it’s price action made more sense, given that it got bid steadily higher and almost stole a win from the Aussie, very likely because of the risk-off vibes.

  • Swiss jobless rate: steady at 3.2% as expected
  • German trade balance: €21.2B vs. €20.8B expected, €20.3B previous
  • French government budget balance: -€62.3B vs. -€66.4B previous
  • French trade balance: -€4.7B vs. -€5.1B expected, -€4.4B previous
  • U.S. NFIB small business index: 105.2 vs. unchanged at 103.6 expected

Major Events/Reports

Commodities slide but precious metals shine

Price action on commodities was similar since they had a good run during the earlier Asian session but erased their gains and were in the red by the end of the morning London session.

Unlike yesterday, however, the risk-off vibes were able to give precious metals a lift, so the commodities rout wasn’t as broad-based.

The earlier commodities rally was attributed by market analysts to China’s trade data since imports were still pointing to broadly strong demand for commodities.

As for the later commodities slide, there’s no clear reason for that since the U.S. dollar index was down by 0.13% to 93.18 for the day when the session ended, which should have helped sustain demand for commodities.

The risk-off vibes apparently spurred safe-haven demand for precious metals.

  • Gold was up by 0.41% to $1,269.86 per troy ounce
  • Silver was up by 0.60% to $16.349 per troy ounce

Base metals were mixed, but like yesterday, many erased earlier gains and were already in the red by the end of the European session.

  • Copper was down by 0.17% to $2.902 per pound
  • Nickel was down by 0.46% to $10,332.50 per dry metric ton

Oil benchmarks were also leaking red, but the bleed-out was not as severe compared to yesterday since there were reports during the session that Saudi Arabia’s Aramco will supposedly reduce oil output in September by around 520,000 barrels per day or so.

  • U.S. WTI crude oil was down by 0.06% to $49.36 per barrel
  • Brent crude oil was down by 0.31% to $52.23 per barrel

More risk aversion in Europe

Feelings of doom and gloom persisted in Europe, so the major European equity indices found themselves in negative territory yet again.

Market analysts were quick to pin the blame for the risk-off vibes on the commodities rout during the session since that apparently weighed down on the basic resources sector and poisoned overall risk sentiment.

  • The pan-European FTSEurofirst 300 was down by 0.12% to 1,500.48
  • Germany’s DAX was down by 0.45% to 12,202.50
  • The blue-chip Euro Stoxx 50 was down by 0.28% to 3,494.00

U.S. equity futures were also weighed down by the risk-off vibes.

  • S&P 500 futures were down by 0.11% to 2,474.88
  • Nasdaq futures were down by 0.10% to 5,927.88

Major Market Mover(s):

AUD

The risk-off vibes and commodities rout couldn’t pin down demand for the Aussie, so much so that the Aussie ended up being the best-performing currency of the morning London session.

There’s no clear reason why, but it’s possible that European traders were pricing in the stronger business confidence in Australia.

Also, it’s possible that market players took a closer look at China’s import data. Sure, the headline reading was a disappointing, but the details show that iron ore imports actually surged by 7.5% year-on-year, which is a good sign for the iron ore market and Australia. After all, iron ore is still Australia’s chief commodity export.

AUD/USD was up by 18 pips (+0.23%) to 0.7934, AUD/CHF was up by 11 pips (+0.14%) to 0.7713, AUD/NZD was up by 13 pips (+0.12%) to 1.0775

 GBP

The pound was the weakest currency of the session. And strangely enough, the pound began tanking without any apparent catalysts.

It’s possible that today’s move is an extension of yesterday’s bearish slide on the pound, which market analysts attributed to a variety of things, namely concern over Brexit, wavering faith in the BOE’s ability to deliver on a rate hike, and souring outlook on the U.K. economy.

GBP/USD was down by 13 pips (-0.10%) to 1.3022, GBP/JPY was down by 48 pips (-0.33%) to 143.68, GBP/CHF was down by 24 pips (-0.19%) to 1.2660

CAD

The Loonie was steady at the start of the session but encountered selling pressure near the end, probably because oil prices were in retreat.

AUD/CAD was up by 25 pips (+0.24%) to 1.0052, NZD/CAD was up by 11 pips (+0.12%) to 0.9328, CAD/CHF was down by 8 pips (-0.11%) to 0.7673

JPY

The yen was also on the move. And it’s price action wasn’t wonky at all since the yen was the second strongest currency of the session, very likely because of the risk-off vibes.

USD/JPY was down by 26 pips (-0.24%) to 110.33, CAD/JPY was down by 21 pips (-0.24%) to 87.09, EUR/JPY was down by 27 pips (-0.21%) to 130.29

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (204K expected, 213K previous)
  • 2:00 pm GMT: U.S. JOLTS job openings (5.74M expected, 5.67M previous)
  • 2:00 pm GMT: IBD/TIPP U.S. economic optimism (50.6 expected, 50.2 previous)
  • 10:35 pm GMT: RBA Assist Gov Kent Speaks