Today’s morning London session was relatively calm, with many pairs contentedly trading sideways in tight ranges and some even closed flat for the session.
The only exception was the Aussie since it was clearly bid higher across the board, very likely because of the risk-on vibes and the rise in gold prices.
- Swiss CPI m/m: -0.1% as expected, 0.0% previous
- Swiss CPI y/y: 0.7% as expected, 0.8% previous
- Chinese new yuan loans: 2,900B vs, 2,050B expected, 584B previous
BOE’s Vlieghe speaks
BOE MPC Member Gertjan Vlieghe was part of a panel discussion earlier. And Vlieghe, a former dove, showed off his hawkish feathers when he basically echoed last week’s hawkish BOE statement when he said that:
“A further rise in interest rates is likely to be appropriate if all those trends continue and we are on a trajectory. It wasn’t just one hike in November and then we take a very long break.”
Vlieghe did emphasize that the future path of monetary policy “really depends on how the economy evolves.” Even so, he thinks that “A bit more than” three hikes over the BOE’s three-year forecast period will be needed.
It should be noted, however, that despite the former dove’s hawkish tune, the pound didn’t really get a bullish boost and had a more mixed performance during the morning London session.
Commodities broadly higher
Most commodities were in rally mode during today’s morning London, including precious metals, despite the prevalence of risk appetite in Europe.
Market analysts were quick to attribute the broad-based rise on commodity prices to the Greenback’s relative weakness.
After all, a weaker U.S. dollar means that globally-traded commodities become relatively cheaper, particularly for those who are holding non-USD currencies.
And for reference, the U.S. dollar index was down by 0.11% to 90.12 for the day when the morning London session came to an end.
Base metals were well in the green.
- Copper was up by 1.39% to $3.076 per pound
- Nickel was up by 0.40% to $13,000.00 per dry metric ton
Oil benchmarks were also in positive territory.
- U.S. WTI crude oil was up by 1.76% to $60.24 per barrel
- Brent crude oil was up by 1.43% to $63.69 per barrel
Precious metals were also raking in gains, despite the risk-on vibes.
- Gold was up by 0.41% to $1,321.10 per troy ounce
- Silver was up by 1.40% to $16.365 per troy ounce
Upbeat start in Europe
Europe is apparently starting the new trading week on an optimistic note after last week’s bloodbath, given that the major European equity indices were well in the green during today’s morning London session.
Market analysts couldn’t really pinpoint a catalyst for the return of risk appetite, so they just shrugged and said that stocks are probably in recovery mode after last week’s severe sell-off.
- The pan-European FTSEurofirst 300 was up by 1.37% to 1,465.53
- Germany’s DAX was up by 1.58% to 12,298.65
- The blue-chip Euro Stoxx 50 was up by 1.76% to 3,371.50
U.S. equity futures also got some love, hinting that the risk-friendly vibes may carry over into the upcoming U.S. session.
- S&P 500 futures were up by 1.14% to 2,648.75
- Nasdaq futures were up by 1.06% to 6,486.00
Major Market Mover(s):
Trading conditions were relatively tight during Monday’s morning London session.
The Aussie was clearly on the move, though, since the Aussie found buyers and ended the session higher across the board, very likely because of the rise in gold prices and risk-on vibes in Europe.
AUD/USD was up by 23 pips (+0.30%) to 0.7836, AUD/CAD was up by 32 pips (+0.33%) to 0.9854, AUD/NZD was up by 34 pips (+0.32%) to 1.0811
Watch Out For:
- 4:30 pm GMT: BOE MPC Member Ian McCafferty is scheduled to speak
- 7:00 pm GMT: U.S. Federal budget balance ($51.0B expected, -$23.2B previous)
- 9:50 pm GMT: RBA Assistant Guv’nah Luci Ellis will be speaking