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The yen was the one currency to rule them all during the morning London session, likely because of the slide in global bond yields, as well as signs that risk appetite was fading away.

Meanwhile, the euro extended its slide from the earlier Asian session, even though there weren’t really any apparent catalysts.

  • German factory orders m/m: -0.4% vs. -0.2% expected, 0.5% previous
  • Swiss CPI m/m: 0.0% vs. -0.1% expected, -0.1% previous
  • Swiss CPI y/y: 0.8% as expected, same as previous
  • U.K. Halifax HPI m/m: -0.6% vs. 0.2% expected, 0.3% previous
  • Euro Zone Sentix investor confidence: 32.9 vs. 31.2 expected, 31.1 previous
  • Euro Zone retail sales m/m: 1.5% vs. 1.4% expected, -1.1% previous

Major Events/Reports

Commodities retreat

Commodities had a hard time during today’s morning London session and were broadly in retreat. Some commodities such as oil were still in positive territory for the day. But even they were off the day’s highs.

And the likely reason for the broad-based retreat in commodity prices was the Greenback’s recent firmness. Other market analysts also blamed the vulnerability in commodity prices on the relatively stronger Greenback. And for reference, the U.S. dollar index was up by 0.36% to 92.08 for the day when the morning London session came to a close.

Not even the returning risk aversion gaven any support to precious metals.

  • Gold was down by 0.26% to $1,318.90 per troy ounce
  • Silver was down by 0.72% to $17.160 per troy ounce

Base metals were mostly in negative territory.

  • Copper was down by 0.12% to $3.226 per pound
  • Nickel was down by 0.41% to $12,492.50 per dry metric ton

Oil benchmarks were able to cling on to their gains, but as mentioned earlier, were already off the day’s highs.

  • U.S. WTI crude oil was up by 0.28% to $61.61 per barrel but reached a high of $61.95 earlier
  • Brent crude oil was up by 0.15% to $67.72 per barrel but reached a high of $67.98 earlier

Fading appetite for risk in Europe

The European equities market opened higher and then raked in even more gains. However, it soon became clear that appetite for risk was fading and risk aversion was returning when all the major European equity indices came off their highs.

Market analysts say that the earlier risk-taking was due the prevailing idea that global growth is accelerating, as well as strong demand for the shares of European vehicle companies.

As to what caused risk appetite to fade later, there’s no clear reason for that yet. However, the basic materials sector was one of the main losers, so it’s possible that the commodities slide during the session is the reason why risk sentiment soured.

The pan-European FTSEurofirst 300 was still up by 0.12% to 1,563.98 but off the day’s high at 1,568.44

  • Germany’s DAX was still up by 0.22% to 13,349.50 but off the day’s high at 13,410.00
  • The blue-chip Euro Stoxx 50 was still up by 0.16% to 3,610.50 but off the day’s high at 3,622.50

U.S. equity futures were already in the red, hinting that risk aversion was the more dominant sentiment during today’s morning London session.

  • S&P 500 futures were down by 0.16% to 2,738.00
  • Nasdaq futures were down by 0.13% to 6,658.75

Global bond yields slide

Another sign that risk aversion was the more dominant sentiment during the session was the demand for bonds, which sent global bonds yields lower.

  • German 10-year bond yield down by 4.77% to 0.419%
  • French 10-year bond yield down by 2.42% to 0.780%
  • U.K. 10-year bond yield down by 1.52% to 1.227%
  • Spanish 10-year bond yield down by 1.72% to 1.487%
  • Italian 10-year bond yield down by 0.85% to 1.977%
  • U.S. 10-year bond yield down by 0.28% to 2.469%
  • Canadian 10-year bond yield down by 0.14% to 2.150%

Major Market Mover(s):

JPY

The yen was the best-performing currency of the morning London session, likely because of the slide in global bonds yields and signs that risk-taking was going away.

Interestingly enough, the yen didn’t hold the top spot for the entirety of the session since the Kiwi initially had a the upper hand when risk-taking prevailed.

USD/JPY was down by 31 pips (-0.27%) to 113.06, CHF/JPY was down by 42 pips (-0.37%) to 115.58, EUR/JPY was down by 62 pips (-0.45%) to 135.35

EUR

The euro was the worst-performing currency of the morning London session even though mid-tier and low-tier Euro Zone economic reports released during the course of the session were net positive.

The euro has actually been sliding since the Asian session and is even currently on course to ending up as the worst-performing currency of the day.

However, there were no clear reasons for the euro’s wonky weakness, but some market analysts say that the euro’s slide was due to profit-taking by euro bulls.

EUR/USD was down by 21 pips (-0.18%) to 1.1971, EUR/NZD was down by 56 pips (-0.34%) to 1.6697, EUR/GBP was down by 21 pips (-0.24%) to 0.8836

Watch Out For:

  • 3:30 pm GMT: BOC’s business outlook survey
  • 5:40 pm GMT: Atlanta Fed President Raphael Bostic is scheduled to speak
  • 6:35 pm GMT: San Francisco Fed President John Williams will speak
  • 8:00 pm GMT: U.S. consumer credit ($18.0B expected, $20.5B previous)