There wasn’t much in terms of volatility and directional movement during today’s morning London session, likely because forex traders are waiting for the final House vote on the tax reform bill. Although lower liquidity because of the coming holidays is also a possibility.
Anyhow, the session wasn’t a complete snooze fest since the Aussie and the Kiwi both found some buyers, likely because of the commodities rally. Meanwhile, the Swissy found sellers despite the risk-off vibes.
- German PPI m/m: 0.1% vs. 0.2% expected, 0.3% previous
- German PPI y/y: 2.5% vs. 2.6% expected, 2.7% previous
- Euro Zone current account: €30.8B vs. €33.4B expected, €39.2B previous
- CBI’s U.K. realized sales: 20 vs. 21 expected, 26 previous
Commodities were broadly in the green during the morning London session.
The Greenback was actually mixed during the session but the U.S. dollar index did dip by 0.03% to 93.06 for the day after reaching an intraday high of 93.12 earlier. And that may have made globally-traded commodities relatively cheaper and a tad more attractive.
It’s also probable that commodities, particularly base metals, were supported by news from earlier that China plans to deepen reform and maintain growth in 2018, according to Xinhua, China’s state news agency. It’s worth pointing out that most commodities were already on their up before that news hit the wires, though.
Other than that, market analysts are still pointing to the North Sea pipeline outage as the reason for oil’s resilience.
Precious metals were in positive territory.
- Gold was up by 0.35% to $1,268.60 per troy ounce
- Silver was up by 0.66% to $16.260 per troy ounce
Oil benchmarks were also raking in gains.
- U.S. WTI crude oil was up by 0.40% to $57.56 per barrel
- Brent crude oil was up by 0.11% to $63.87 per barrel
Base metals also did well. In fact, some base metals clearly outperformed.
- Copper was up by 0.65% to $3.172 per pound
- Nickel was up by 0.80% to $3,227.75 per dry metric ton
Risk-off vibes in Europe
The major European equity indices had a mixed start, but most were in negative territory by the end of the morning London session. Risk aversion was therefore the more dominant sentiment in Europe. Well, during the morning London session at least.
Market analysts say that the markets have already fully priced-in the passage of the U.S. tax reform bill, which has dampened appetite for risk and even prompted some profit-taking.
- The pan-European FTSEurofirst 300 was down by 0.09% to 1,536.91
- Germany’s DAX was down by 0.17% to 13,193.50
- The blue-chip Euro Stoxx 50 was down by 0.24% to 3,573.50
Major Market Mover(s):
AUD & NZD
The higher-yielding Aussie and Kiwi weren’t fazed by the risk-off vibes in Europe since they closed higher against their peers. The and between the two of ’em, the Aussie is the stronger, so much so that the Aussie is currently on track to finishing the trading day as the one currency to rule them all.
There weren’t really any catalysts, but the two comdolls were likely taking directional cues from the commodities rally.
It’s also possible that the China-related news may have boosted demand for the Aussie and the Kiwi. After all, China is the main export market of Australia and New Zealand. However, the Aussie and the Kiwi were already on their way up before that news made the rounds.
AUD/USD was up by 10 pips (+0.13%) to 0.7675, AUD/JPY was up by 15 pips (+0.17%) to 86.88, AUD/CHF was up by 22 pips (+0.29%) to 0.7578
NZD/USD was up by 7 pips (+0.10%) to 0.6978, NZD/JPY was up by 12 pips (+0.16%) to 78.98, NZD/CHF was up by 19 pips (+0.28%) to 0.6890
Despite the risk-off vibes, the safe-haven Swissy ended up at the bottom of the forex heap. Other than SNB meddling ahead of the final vote on the U.S. tax reform bill, there’s no real reason for the Swissy’s weakness, however.
Although it’s also possible that forex traders who loaded up on the Swissy because of uncertainty related to the tax reform bill were unwinding their positions since pretty much everyone already expects that Trump will sign the tax reform bill into law.
USD/CHF was up by 17 pips (+0.18%) to 0.9873, EUR/CHF was up by 20 pips (+0.18%) to 1.1691, GBP/CHF was up by 44 pips (+0.33%) to 1.3236
Watch Out For:
- 1:15 pm GMT: BOE Guv’nah Carney will speak
- 1:30 pm GMT: Canada’s wholesale sales (0.5% expected, -1.2% previous)
- 2:00 pm GMT: Swiss quarterly bulletin
- 2:00 pm GMT: CB’s Chinese leading index (1.3% previous)
- 3:00 pm GMT: U.S. existing home sales (5.53M expected, 5.48M previous)
- 3:30 pm GMT: U.S. crude oil inventories (-3.6M expected, -5.1M previous)
- 9:45 pm GMT: New Zealand’s GDP growth (0.6% expected, 0.8% previous)