There was decent enough volatility during today’s morning London session However, directional movement was in short supply, resulting in choppy price action for most pairs.
But despite the choppy price action, the Kiwi was clearly higher against its peers while the Swissy was the weakest among the lot, likely because of another bout of risk-taking in Europe.
And while price action on the euro was also kinda choppy, the euro is still worth noting since price action on euro pairs showed roughly uniform two-way action.
- Swiss GDP q/q: 0.6% as expected, 0.3% previous
- Swiss GDP y/y: 1.2% vs. 0.8% expected, 0.3% previous
- German retail sales m/m: -1.2% vs. 0.3% expected, 0.5% previous
- German retail sales y/y: -1.4% vs. 2.8% expected, 4.1% previous
- Nationwide U.K. HPI m/m: 0.1% as expected, 0.2% previous
- French HICP m/m: 0.1% as expected, same as previous
- French HICP y/y: 1.3% vs.s steady at 1.2% expected
- Swiss KOF economic indicator: 110.3 vs. 109.7 expected, 109.8 previous
- Swiss retail sales y/y: -3.0% vs. 0.3% expected, 0.5% previous
- Euro Zone flash HICP y/y: 1.5% vs. 1.6% expected, 1.4% previous
- Euro Zone flash core HICP y/y: 0.9%, same as previous vs. 1.0% expected
- Jobless rate in the Euro Zone: 8.8% vs. steady at 8.9% expected
Mixed (but net positive) Euro Zone data
The Euro Zone’s jobs report and inflation report were released earlier during the session.
Up first is the Euro Zone’s November inflation report, and it was disappointing on the surface since headline HICP only increased by 1.5% year-on-year, which is a tick slower compared to the consensus for a 1.6% increase.
However, it’s worth pointing out that the 1.5% increase is still an improvement over the previous +1.4% reading.
Moreover, the 1.5% reading is still in line with the ECB’s forecast that headline inflation will rise by 1.5% year-on-year in 2017, as laid out in the ECB’s September macroeconomic projections.
As for the ECB’s preferred measures for core inflation, HICP less energy maintained the previous month’s annaul pace of +1.2%. This is also in-line with the ECB’s forecast that HICP less energy would rise by 1.2% in 2017.
As for HICP less energy and unprocessed food, that came in at 1.1% year-on-year in November, which also meets the ECB’s forecast for a 1.1% rise in 2017.
Moving on the Euro Zone’s October jobs report, that revealed that instead of holding steady at 8.9% as expected, the jobless rate for the Euro Zone as a whole fell from to 8.8% in October, which is the best reading since January 2009.
More importantly, the labor market is tightening at a faster-than-expected pace since the ECB projects that the jobless rate for the Euro Zone as a whole will come in at 9.1% by the end of the year.
Commodities recover, but precious metals fall further
After getting a broad-based beat-down commodities were finally able to lick their wound during today’s morning London session. However, not all commodities got some respite since commodities got slapped even lower during the course of the session.
The Greenback was mixed for the session but was actually slightly higher for the day. And for reference, the U.S. dollar index was up by 0.05% to 93.27 for the day when the session ended. In fact, some market analysts blamed the slide in precious metals, gold in particular, on the higher Greenback.
However, it’s less clear why other commodities were able to bounce back. Bargain buying and short covering after a few days of declines are possibilities, though.
Also, some market analysts pointed to China’s stronger PMI readings from the earlier session as the reason as to why base metals bounced higher.
As for the recovery in oil prices, some market analysts say that was due to expectations that OPEC will likely announce another extension to its oil cut deal.
- Oil benchmarks clearly outperformed.
- U.S. WTI crude oil was up by 0.73% to $57.72 per barrel
Brent crude oil was up by 1.01% to $63.16 per barrel
Base metals were actually mixed, but most were in positive territory.
- Copper was up by 0.54% to $3.085 per pound
- Zinc was up by 0.55% to $3,175.50 per dry metric ton
Precious metals didn’t do too well, likely because of the risk-on vibes in Europe.
- Gold was down by 0.13% to $1,280.41 per troy ounce
- Silver was down by 0.04% to $16.451 per troy ounce
Another upbeat day in Europe
Another wave of optimism spread throughout Europe during today’s morning London session since the major European equity indices were broadly in the green yet again.
And today’s bout of risk-taking was attributed by market analysts to higher European bond yields, which boosted demand for financial shares and limited the impact of falling tech shares, improving overall risk sentiment in the process.
- The pan-European FTSEurofirst 300 was up by 0.32% to 1,531.00
- Germany’s DAX was up by 0.55% to 13,132.50
- The blue-chip Euro Stoxx 50 was up by 0.34% to 3,601.50
U.S. equity futures were also bouyed by the risk-on vibes in Europe.
- S&P 500 futures were up by 0.28% to 2,632.25
- Nasdaq futures were up by 0.29% to 6,323.88
Major Market Mover(s):
The Kiwi was able to edge out its forex rivals, likely because of the risk-on vibes and commodities recovery during the session.
The Aussie, the Kiwi’s fellow higher-yielding comdoll, didn’t do as well, though, likely because the Aussie was also taking directional cues from gold and gold was on the decline.
NZD/USD was up by 6 pips (+0.09%) to 0.6843, NZD/CHF was up by 18pips (+0.27%) to 0.6757, NZD/CAD was up by 8 pips (+0.10%) to 0.8819
The safe-haven Swissy ended the session lower across the board, likely because of the risk-on vibes. Well, that or the SNB was sneakily weakening the Swissy again.
USD/CHF was up by 24 pips (+0.24%) to 0.9874, GBP/CHF was up by 40 pips (+0.30%) to 1.3295, CAD/CHF was up by 13 pips (+0.18%) to 0.7662
The euro was mixed for the session, but it’s still worth mentioning because price action across euro pairs was roughly uniform.
The euro initially took a tumble across the board, either as a delayed reaction to Germany’s disappointing retail sales report or due to preemptive positioning ahead of the Euro Zone’s inflation report.
And when the Euro Zone’s inflation report was released, the euro tried to sink even lower, but dip demand was noticeable and the euro snapped higher, probably because of profit-taking by preemptive shorts and likely because inflation is still evolving within the ECB’s expectations.
EUR/USD was down by 19 pips (-0.16%) to 1.1844 with 1.1809 as session low, EUR/CAD was down by 13 pips (-0.09%) to 1.5264 with 1.5223 as session low, EUR/GBP was down by 19 pips (-0.21%) to 0.8797 with 0.8776 as session low
Watch Out For:
- 1:30 pm GMT: Canada’s current account (-$20.0B expected, -$16.3B previous)
- 1:30 pm GMT: U.S. initial jobless claims (240K expected, 239K previous)
- 1:30 pm GMT: U.S. core PCE price index (0.2% expected, 0.1% previous), personal spending (0.3% expected, 0.1% previous), and personal income (0.3% expected, 0.4% previous)
- 2:45 pm GMT: Chicago PMI (63.0 expected, 66.2 previous)
- 5:30 pm GMT: Fed Governor Randal Quarles will speak
- 6:00 pm GMT: Dallas Fed President Robert Kaplan has a speech
- 9:45 pm GMT: New Zealand’s terms of trade (1.3% expected, 1.5% previous)