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Oil was in the red, but the Loonie somehow managed to outperform its peers during today’s choppy morning London session.

The pound, meanwhile, extended its losses in the wake of yesterday’s disappointing news that Theresa May failed to hammer out a deal. The pound appears to be finding support, though, since the pound’s slide stalled across the board.

  • Spanish services PMI: 54.4 vs. 55.2 expected, 54.6 previous
  • Italian services PMI: 54.7 vs. 53.4 expected, 52.1 previous
  • French final services PMI: 60.4 vs. no change from 60.2 expected
  • German final services PMI: 54.3 vs. no change from 54.9 expected
  • Euro Zone final services PMI: unchanged at 56.2 as expected
  • U.K. services PMI: 53.8 vs. 55.0 expected, 55.6 previous
  • Euro Zone retail sales m/m: -1.1% vs. -0.6% expected, 0.7% previous
  • Canadian and U.S. trade reports coming up
  • Dairy auction currently underway

Major Events/Reports

U.K. services PMI

Markit released the latest U.K.’s services PMI report during the session, revealing that the headline PMI reading dropped from a six-month high of 55.6 to a five-month low of 53.8 in November. This is worse than the consensus that the PMI reading would only ease to 55.0.

Commentary from Markit was also pretty downbeat. For instance, “new business growth also eased since October and was weaker than seen on average so far this year.”

In addition, “the rate of staff hiring was the joint-slowest since March.” And according to survey respondents, “stretched budgets and Brexit-related uncertainty had continued to act as a brake on growth.”

On a more upbeat note (for CPI), “average cost burdens increased at a sharp and accelerated pace in November. The current phase of input price inflation remains the strongest since the first half of 2011.”

More importantly, companies are passing on their higher input costs because November saw “the fastest rise in prices charged by service providers since February 2008.”

Commodities hammered

Commodities got a beating across the board during today’s morning London session, with gold being the only holdout since it was the sole green boat in a sea of red. But even gold was off its intraday highs and was barely clinging on to its gains (what’s left of them).

Market analysts generally blamed the commodities slide on the Greenback’s strength since a stronger Greenback would make globally-traded commodities relatively more expensive.

And for reference, the U.S. dollar index was up by 0.15% to $93.19 for the day when the session came to an end.

Other than that, some market analysts also pointed post-OPEC profit-taking as the reason for oil’s poor performance.

Oil benchmarks took hits.

  • U.S. WTI crude oil was down by 0.66% to $57.09 per barrel
  • Brent crude oil was down by 0.35% to $62.23 per barrel

Base metals were hit particularly hard.

  • Copper was down by 2.04% to $3.027 per pound
  • Nickel was down by 2.13% to $11,150.00 per dry metric ton

Precious metals were also suffering despite the risk-off vibes in Europe.

  • Gold was still up by 0.01% to $1,277.80 per troy ounce but off the day’s high at $1,279.70.
  • Silver was down by 0.42% to $16.305 per troy ounce

Risk aversion returns to Europe

European equity indices had a mixed start during today’s morning London session after yesterday’s risk-on party.

However, it soon became clear that Europe was suffering from a hangover and that risk aversion was the more dominant sentiment since the major European equity indices began to dip, with most already in negative territory by the end of the session.

Market analysts blamed the risk-off vibes on risk sentiment spillover from the earlier sessions, namely with regard to faltering faith in the tax reform bill, which took a toll on financial shares.

These same market analysts also blamed the broad-based commodities slide since that apparently weighed on mining shares as well.

  • The pan-European FTSEurofirst 300 was down by 0.40% to 1,516.39
  • Germany’s DAX was down by 0.59% to 12,982.00
  • The blue-chip Euro Stoxx 50 was down by 0.44% to 3,558.50

Major Market Mover(s):

GBP

The pound has been sliding since yesterday’s U.S. session because Theresa May failed to strike a deal. And the pound only extended its losses during today’s morning London session.

Interestingly enough, however, the miss in the U.K.’s services PMI report apparently gave the pound support since the pound jumped higher and then began trading sideways after that.

It’s not yet clear if traders used the PMI report to cover their shorts or if we’re seeing actual demand because of the the details of the PMI report, namely the part where it noted that November saw “the fastest rise in prices charged by service providers since February 2008,” which is a good sign for inflation (and rate hike expectations).

But then again, British finance minister Philip Hammond was speaking at the time, and he assured those who would listen that “We’re very confident that we will be able to move this forward.”

GBP/USD was down by 23 pips (-0.16%) to 1.3417, GBP/CHF was down by 30 pips (-0.20%) to 151.12, GBP/CAD was down by 53 pips (-0.31%) to 1.6965

CAD

The Loonie somehow edged out its peers and was the best-performing currency of the morning London session, even though oil prices extended their slide during the session.

Aside from preemptive positioning ahead of Canada’s trade report for later and this week’s BOC statement, there’s no clear reason for the Loonie’s strength, however.

USD/CAD was down by 21 pips (-0.17%) to 1.2645, AUD/CAD was down by 17 pips (-0.18%) to 0.9655, NZD/CAD was down by 10 pips (-0.12%) to 0.8707

Watch Out For:

  • 1:30 pm GMT: U.S. trade balance (-$45.4B expected, -$43.5B previous)
  • 1:30 pm GMT: Canada’s trade balance (-$2.70B expected, -$3.18B previous)
  • 2:45 pm GMT: Markit’s final U.S. services PMI (55.4 expected, 54.7 previous)
  • 3:00 pm GMT: ISM’s U.S. non-manufacturing PMI (59.0 expected, 60.1 previous)
  • Dairy auction currently underway (-3.4% previous); auction usually ends at around 2:00 pm GMT