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Nothing really major in today’s calendar. Even so, there was price action aplenty. And noteworthy among these was the pound’s broad-based slide, despite the lack of catalysts.

Another noteworthy theme is the Aussie’s broad-based recovery after getting hammered during the earlier Asian session.

Yet another theme is CAD strength since CAD edged out the Aussie and was the best-performing currency of the session, even though the BOC will be announcing its monetary policy statement in a few hours.

  • German factory orders m/m: 0.5% vs. -0.2% expected, 1.2% previous
  • Swiss CPI m/m: -0.1% vs. 0.0% expected, 0.1% previous
  • Swiss CPI y/y: 0.8% as expected vs. 0.7% previous
  • Euro Zone retail sales PMI: 52.4 vs. 51.1 previous
  • ADP report coming up
  • BOC rate statement later

Major Events/Reports

Some Brexit-related updates

There were a few Brexit-related headlines during the session. And most prominent among them was the tweet from The Sun Newspaper political editor Tom Newton Dunn.

The idea that there won’t be a deal this week was reinforced later when the Belfast Telegraph released the report below.

Commodities fall further but precious metals bounce

The commodities retreat continued during today’s morning London session. Unlike yesterday, however, the commodities slide wasn’t broad-based since precious metals were able to recover some lost ground, likely because of the risk-off vibes. After all, precious metals are considered as traditional safe-havens.

As usual, the Greenback’s relative strength was cited as the general reason for the slide. And for reference, the U.S. dollar index was up by 0.11% to $93.37 for the day when the session ended.

Aside from that, market analysts say that investors were unwinding their long positions on base metals on expectations that China’s economic growth would slow during the first half of 2018.

The drop in oil prices, meanwhile, was blamed by market analysts on speculation that official U.S. oil inventories data from the U.S. Energy Information Administration (EIA), which would be released later today, would be disappointing since an earlier report from the American Petroleum Institute (API) showed a build-up in inventories of gasoline and other distillates.

Oil benchmarks were bleeding a lot.

  • U.S. WTI crude oil was down by 1.42% to $56.80 per barrel
  • Brent crude oil was down by 1.24% to $62.08 per barrel

Base metals were actually mixed, but most were in the red.

  • Zinc was down by 0.22% to $3,104.25 per dry metric ton
  • Nickel was down by 0.60% to $10,842.50 per dry metric ton

As mentioned earlier, precious metals went against the bearish tide, likely because of safe-haven demand.

  • Gold was up by 0.43% to $1,270.40 per troy ounce
  • Silver was up by 0.39% to $16.130 per troy ounce

Another gloomy day in Europe

The feelings of doom and gloom that manifested yesterday refused to go away, so the major European equity indices had another rough time and were broadly in the red by the end of the morning London session.

Market analysts say that the downbeat mood in Europe was a spillover from the earlier sessions. As for some details, the persistent slide in base metal prices was cited as weighing on mining shares. Details of the U.S. tax reform bill were also supposedly perceived as negative for European tech companies and were not as beneficial to European banks, which is why the tech and financial sectors took the hardest hits.

  • The pan-European FTSEurofirst 300 was down by 0.62% to 1,511.27
  • Germany’s DAX was down by 0.98% to 12,920.50
  • The blue-chip Euro Stoxx 50 was down by 0.90% to 3,543.00

Even U.S. equity futures were also burdened by all that risk aversion.

  • S&P 500 futures were down by 0.18% to 2,623.50
  • Nasdaq futures were down by 0.53% to 6,238.25

Global bond yields ease

Another sign of the gloomy mood in Europe was the high demand for bonds, which pulled global bond yields lower.

  • German 10-year bond yield down by 3.70% to 0.312%
  • French 10-year bond yield down by 0.65% to 0.630%
  • U.K. 10-year bond yield down by 1.35% to 1.241%
  • U.S. 10-year bond yield down by 0.90% to 2.335%
  • Canadian 10-year bond yield down by 0.07% to 1.892%

Major Market Mover(s):

GBP

The pound has been sliding broadly since the late Asian session. And when the morning London session rolled around, the pound continued to bleed out.

There were a few Brexit-related headlines, but nothing really market-moving, so market analysts pointed to “Brexit uncertainty” as the reason for the pound’s weakness.

A catalysts did finally appear late into the session when The Sun Newspaper political editor Tom Newton Dunn tweeted about unnamed sources claiming “No deal this week,” which gave the pound a final bearish kick.

GBP/USD was down by 37 pips (-0.28%) to 1.3369, GBP/CAD was down by 108 pips (-0.63%) to 1.6922, GBP/AUD was down by 79 pips (-0.45%) to 1.7608

AUD

The Aussie was able to stage a broad-based recovery during the session, despite the risk-off vibes.

One likely reason for the Aussie’s recovery was the rise in gold prices. Another reason is profit-taking by Aussie shorts after the Aussie got whupped earlier when Australia’s GDP report failed to impress.

Of course, it’a also possible that both reasons were in play.

AUD/USD was up by 12 pips (+0.17%) to 0.7592, AUD/CHF was up by 21 pips (+0.28%) to 0.7504, AUD/NZD was up by 38 pips (+0.35%) to 1.1016

CAD

The Aussie wasn’t the top dog of the morning London session. That honor belongs to the Loonie, which is kinda wonky since oil slumped during the session and the BOC statement is coming up.

Perhaps we’re seeing preemptive positioning ahead of the BOC statement?

USD/CAD was down by 45 pips (-0.36%) to 1.2657, NZD/CAD was down by 46 pips (-0.53%) to 0.8723, EUR/CAD was down by 66 pips (-0.44%) to 1.4951

Watch Out For:

  • 1:15 pm GMT: ADP’s U.S. non-farm employment change (190K expected, 235K previous)
  • 1:30 pm GMT: Canada’s quarterly labor productivity (-0.4% expected, -0.1% previous)
  • 1:30 pm GMT: Revised U.S. non-farm productivity (3.2% expected, 3.0% previous) and unit labor costs (0.3% expected, 0.5% previous)
  • 3:00 pm GMT: BOC rate statement (overnight rate steady at 1.00% expected)
  • 3:30 pm GMT: U.S. crude oil inventories (-3.2M expected, -3.4M previous)