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Price action was somewhat muted and choppy during today’s morning London session. That doesn’t mean that the session was a snooze fest, though, since the euro broadly jumped higher at the start of the session after getting hammered during the earlier session.

The safe-haven Swissy, meanwhile, was lower across the board, likely because of the returning risk-on vibes.

And while the pound was mixed and had two-way action during the session, it’s also worth noting since it found buyers early on, only to slide back down after Barnier, the E.U.’s top Brexit negotiator, gave speech.

  • German PPI m/m: 0.3% as expected, same as previous
  • German PPI y/y: 2.7% as expected vs. 3.1% previous
  • German President Steinmeier will give a statement later
  • ECB Overlord Draghi will be testifying later

Major Events/Reports

E.U.’s Barnier speaks

Michel Barnier, the E.U.’s top Brexit negotiator, was speaking earlier during the session. And, well, Barnier didn’t sound too nice. In fact, Barnier sounded hostile at times.

Barnier, for instance, implied that E.U. member states may block a trade deal if the U.K. veers away from “the European model” when he said the following:

“The UK has chosen to leave the EU. Does it want to stay close to the European model or does it want to gradually move away from it? The UK’s reply to this question will be important and even decisive because it will shape the discussion on our future partnership and shape also the conditions for ratification of that partnership in many national parliaments and obviously in the European Parliament. I do not say this to create problems but to avoid problems.”

Barnier also stressed the so-called “four freedoms”, adding that the U.K.’s desire to have control of its borders again goes against the “free movement of people” and that means that “the UK will lose the benefits of the Single Market.”

To quote directly from Barnier (emphasis mine):

“The Single Market is a package, with four indivisible freedoms, common rules, institutions and enforcement structures. The UK knows these rules like the back of its hand. It has contributed to defining them over the last 44 years. With a certain degree of influence… We took note of the UK decision to end free movement of people. This means that the UK will lose the benefits of the Single Market. This is a legal reality. The EU does not want to punish, once again. It simply draws the logical consequence of the UK’s decision to take back control.

Finally, Barnier flat out said that U.K. banks will lose access to the E.U. single market. Again, to quote from the man himself (emphasis mine):

The legal consequence of Brexit is that UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.”

SPD won’t play with Merkel

Reuters released a report earlier today. And according to this report, Reuters got a peek at a document from the Social Democratic Party of Germany (SPD).

And the SPD document, in turn, stated that “Given the results of the Sept. 24 election, we are not available for entry into a grand coalition” with Angela Merkel’s Christian Democratic Union.

Moreover, “We are not afraid of new elections” the SPD document said, which is bad news for Merkel after earlier news that German coalition negotiations failed to pan out.

Commodities take hits

Commodities were hard-pressed during today’s morning London session, with almost all commodities printing losses.

And according to market analysts, the broad-based slide in commodities was due to the Greenback’s strength.

It should be noted, however, that the Greenback was actually mixed during the session itself. Even so, the U.S. dollar index was still up by 0.10% to 93.69 for the day when the session ended.

Other than that, market analysts also say that oil was in retreat because of jitters ahead of OPEC’s November 30 meeting.

Base metals were in the red.

  • Copper was down by 0.13% to $3.063 per pound
  • Nickel was down by 0.43% to $11,547.50 per dry metric ton

Oil benchmarks were also leaking red.

  • U.S. WTI crude oil was down by 0.46% to $56.45 per barrel
  • Brent crude oil was down by 0.70% to $62.28 per barrel

And the same can be said of precious metals.

  • Gold was down by 0.40% to $1,291.30 per troy ounce
  • Silver was down by 1.19% to $17.167 per troy ounce

Risk-friendly start in Europe

The major European equity indices opened the new trading week on a weak note, thanks to earlier news about the breakdown in German government coalition negotiations.

However, appetite for risk came back in force later, so much so that most of the major European equity indices were already in the green by the end of the morning London session.

And according to market analysts, the market just brushed off the poor news from earlier because a political crisis in Germany is still unlikely.

  • The pan-European FTSEurofirst 300 was up by 0.35% to 1,514.47
  • Germany’s DAX was up by 0.25% to 13,024.75
  • The blue-chip Euro Stoxx 50 was up by 0.27% to 3,557.50

Major Market Mover(s):

EUR

After getting a beat-down during the earlier Asian session, the euro surged at the start of the morning London session and then traded roughly sideways until the session came to an end.

There was no apparent catalyst for the euro’s jump, and market analysts only stated the obvious when they noted that European traders just brushed off the negative news from Germany.

However, one possible reason is profit-taking by euro shorts since German President Frank-Walter Steinmeier will be speaking later and he may have some things to say about the recent failure in coalition-formation negotiations in Germany.

EUR/USD was up by 28 pips (+0.24%) to 1.1782, EUR/JPY was up by 45 pips (+0.35%) to 132.13, EUR/AUD was up by 54 pips (+0.35%) to 1.5593

CHF

The returning risk-on vibes in Europe weighed on both the yen and the Swissy, with the Swissy apparently getting the worst of it, so much so that the Swissy ended up as the worst-performing currency of the morning London session.

USD/CHF was up by 23 pips (+0.23%) to 0.9909, EUR/CHF was up by 46 pips (+0.40%) to 1.1676, GBP/CHF was up by 15 pips (+0.11%) to1.3120

GBP

The pound had a good start, thanks to renewed optimism over Brexit talks, market analysts say.

However, those hopes probably got muddled when Barnier said some not-so-nice things during his speech since the pound quickly found sellers and ended the session on a mixed note.

GBP/USD was down by 6 pips (-0.04%) to 1.3240 with 1.3279 as session high, GBP/CAD was up by 13 pips (+0.08%) to 1.6927 with 1.6953 as session high, GBP/AUD was up by 3 pips (+0.08%) to 1.7522 with 1.7550 as session high

Watch Out For:

  • 1:30 pm GMT: German President Frank-Walter Steinmeier will give a statement
  • 2:00 pm GMT: ECB Overlord Draghi will testify before the European Parliament Economic and Monetary Affairs Committee
  • 2:00 pm GMT: CB’s Chinese leading index (1.0% previous)
  • 3:00 pm GMT: CB’s U.S. leading index (0.6% expected, -0.2% previous)
  • 4:00 pm GMT: ECB Overlord Draghi will testify again
  • 6:30 pm GMT: BOE Deputy Governor David Ramsden will speak