The Greenback extended its gains during the session, even though there were no apparent catalysts.
Greenback strength wasn’t the only theme that continued to play out, though, since the Aussie and the Kiwi both extended their losses during the session. Although the Aussie was able to outpace the Kiwi in the race to the bottom.
The pound was mixed and had choppy price action during the session, but it’s still worth mentioning because its topsy-turvy price action had a certain uniformity to it.
- Swiss jobless rate: 3.0% vs. steady at 3.1% expected
- German industrial production m/m: -1.4% vs. 0.9% expected, -0.9% previous
- German industrial production y/y: 2.7% vs. 4.3% expected, 3.6% previous
- French trade balance: -€4.96B vs. -€4.68B expected, -€4.67B previous
- Swiss foreign currency reserves: CHF 738B vs. CHF 742B previous
- Halifax U.K. HPI: 0.5% vs. 0.2% expected, 0.3% previous
- Euro Zone revised GDP q/q: unchanged at 0.6% as expected
- Euro Zone revised GDP y/y: 2.6% vs. unchanged at 2.5% expected
Some Brexit-related updates
There were reports earlier that the deadline on Brexit progress could get extended.
However, hopes for that were dashed when Nick Gutteridge, Brussels Correspondent for the Daily Express, tweeted the following:
EU Commission says suggestions Brexit progress deadline could be extended into next week are 'not correct'. Says the deadline is actually 'this week…and our week includes Sunday'.
— Nick Gutteridge (@nick_gutteridge) December 7, 2017
However, a spokesman for Theresa May gave the following optimistic comment later:
“As the PM set out at the start of the week in the Commons, we think we’re close to an agreement but there’s more work to be done. It’s an ongoing process and we’ll update you as it goes along.”
Commodities recover but precious metals falter
In what appears to be a reversal of yesterday’s fortunes, most commodities staged a broad-based recovery while precious metals tooks hits in turn.
Interestingly enough, the Greenback was already in the green for the day and climbed even higher during the course of the session, with the U.S. dollar index was up by 0.19% to 93.71 for the day when the session ended.
And market analysts blamed the slide in precious metals on the Greenback’s strength. However, a stronger Greenback didn’t seem to have a dampening effect on demand for the other commodities.
In fact, market analysts say that the rise in prices for some base metals was due to bargain-buying after a few days of declines.
Oil benchmarks recovered.
- U.S. WTI crude oil was up by 0.13% to $56.03 per barrel
- Brent crude oil was up by 0.44% to $61.49 per barrel
Base metals were more mixed, but most were able to rake in gains.
- Copper was up by 0.39% to $2.973 per pound
- Nickel was up by 0.60% to $10,842.50 per dry metric ton
Precious metals had a tough time, despite signs of returning risk-off vibes in Europe.
- Gold was down by 0.77% to $1,256.30 per troy ounce
- Silver was down by 0.72% to $15.840 per troy ounce
Risk-on start in Europe, but deteriorating
At first, it looked like risk-taking would still be the name of the game in Europe since the major European equity indices opened higher and then edged even higher during the first couple of hours.
However, it soon became apparent that risk aversion was returning to Europe since the major European equity indices later came off their highs and some were even already in negative territory by the end of the session.
Market analysts attributed the earlier risk-on vibes to risk sentiment spillover from the earlier session, which sustained demand for tech shares.
As for the returning risk-off vibes, there’s no clear reason for that as of yet. It’s likely, however, that jitters are growing over Trump’s decision to recognize Jerusalem as Israel’s capital since there are ongoing riots in the West Bank in response to Trump’s announcement.
- The pan-European FTSEurofirst 300 was already down by 0.09% to 1,521.65
- Germany’s DAX was still up by 0.06% to 13,007.00 but off the day’s high at 13,085.00
- The blue-chip Euro Stoxx 50 was still up by 0.01% to 3,561.50 but off the day’s high at 3,582,00
Major Market Mover(s):
The Greenback was the best-performing currency of the morning London session and is currently on course to finishing as the best-performing currency of the day.
There were no apparent catalysts for the Greenback’s strength, but market analysts have been cautious optimism that there will be more progress in the tax reform bill soon.
USD/JPY was up by 20 pips (+0.18%) to 112.74, USD/CHF was up by 36 pips (+0.37%) to 0.9940, USD/CAD was up by 15 pips (+0.12%) to 1.2834
The Kiwi is still the worst-performing currency of the day (so far). And while the Kiwi extended its losses during the morning London session, it was the Aussie that had the dishonor of being the biggest loser, likely because sliding gold prices also weighed on the Aussie.
AUD/USD was down by 15 pips (-0.20%) to 0.7516, AUD/JPY was down by 11 pips (-0.145%) to 84.75, AUD/CAD was down by 13 pips (-0.14%) to 0.9646
The pound was mixed for the session and price action across pound pairs were rather choppy.
However, there was actually a certain degree of uniformity in all that chaos since most pound pairs encountered selling pressure around 10 am GMT, got pummeled until 11 am GMT, only to find buyers again by 12 am GMT.
The dip was apparently a response to a tweet dashing hopes for an extension to the deadline for talks on Brexit progress. As for the later recovery, it’s not clear what the catalyst was, but the comment from Theresa May’s spokesman appears to be the catalyst.
GBP/USD was down by 4 pips (-0.03%) to 1.3370 with 1.3319 as session low, GBP/AUD was up by 30 pips (+0.17%) to 1.7788 with 1.7706 as session low, GBP/JPY was up by 21 pips (+0.15%) to 150.75 with 150.16 as session low
Watch Out For:
- 1:30 pm GMT: U.S. initial jobless claims (240K expected, 238K previous)
- 1:30 pm GMT: Canadian building permits (1.0% expectedd, 3.8% previous)
- 3:00 pm GMT: Canada’s Ivey PMI (62.5 expected, 63.8 previous)
- 4:00 pm GMT: ECB Overlord Draghi is scheduled to speak in a press conference
- 8:00 pm GMT: U.S. consumer credit ($17.00B expected, $20.83B previous)
- 9:45 pm GMT: New Zealand’s manufacturing sales (3.9% previous)