The pound got a bullish infusion during the morning London session, apparently because of a Brexit-related report. The Kiwi gave the pound a run for its money, though, likely because the risk-on vibes gave the Kiwi a lift.
However, the same risk-on vibes likely weighed down on the safe-haven Swissy, so much so that the Swissy found itself at the bottom of the forex heap.
- Swiss trade balance: CHF 2.09B vs. CHF 2.78B expected, CHF 2.63B previous
- German PPI m/m: 0.5% vs. 0.3% expected, 0.2% previous
- German PPI y/y: 2.1% vs. 1.8$ expected, 2.3% previous
- Euro Zone ZEW economic sentiment: 29.3 vs. 28.4 expected, 31.8 previous
- German ZEW economic sentiment: 17.8 vs. 16.0 expected, 20.4 previous
- U.K.’s CBI industrial order expectations: 10 vs. 12 expected, 14 previous
Earlier during the session, the Business Insider released a report that cited an unnamed source who is “familiar with the [European] Parliament’s activities.”
And according to this source, the European Parliament is supposedly planning to release a “very detailed” 60-paragraph resolution proposal that will lay out the future relationship between the E.U. and the U.K. after an actual Brexit.
The core of it is that the E.U. plans to have an “association agreement” with the U.K. that may give the U.K. “privileged” access to the E.U. single market.
If this report is the real deal, then this means that the E.U. is softening its stance, contrary to what top E.U. Brexit negotiator Michel Barnier has been saying.
Moreover, the Business Insider also cited another unnamed source “close to Verhofstadt,” a member of the European Parliament, as saying that:
“It is correct that Members are working on a resolution proposal for the framework of future relations with the UK likely to be debated and voted during the March plenary session.”
Most commodities fall
Most commodities got a beat-down during the morning London session. Interestingly enough, however, oil benchmarks were mixed since U.S. WTI was up while other oil benchmarks were down.
Market analysts say this divergence was due to higher U.S. oil output weighing down on other oil benchmarks while lower Canadian oil supply because of problems related to the Keystone pipeline is giving U.S. WTI a boost.
As for the broad-based commodities slide, market analysts generally blamed that on the Greenback’s recent strength.
And for reference, the U.S. dollar index was up by 0.47% to 89.50 for the day by the end of the session.
Base metals were actually mixed, but many were in negative territory.
- Copper was down by 1.77% to $3.191 per pound
- Tin was down by 0.18% to $21,442.50 per dry metric ton
Precious metals were down and out for the count.
- Gold was down by 1.05% to $1,341.90 per troy ounce
- Silver was down by 1.23% to $16.505 per troy ounce
As mentioned earlier, oil benchmarks diverged since U.S. WTI crude was in the green.
- U.S. WTI crude oil was up by 0.83% to $62.06 per barrel
- Brent crude oil was down by 0.64% to $65.25 per barrel
Some risk-taking in Europe
Most of the major European equity indices were moderately in the green, indicating that risk appetite was the more dominant sentiment in Europe.
The signs of risk-taking were attributed by market analysts on positive earnings reports, particularly for HSBC and Edenred. However, the slide in commodity prices weighed down on mining shares, which placed a damper on risk-taking activity.
- The pan-European FTSEurofirst 300 was up by 0.08% to 1,482.84
- Germany’s DAX was up by 0.11% to 12,398.50
- The blue-chip Euro Stoxx 50 was up by 0.27% to 3,415.50
Major Market Mover(s):
The pound surged higher against all its peers, apparently as a bullish reaction to the Business Insider report that I mentioned earlier.
The pound then wobbled a bit after that, likely because of profit-taking. Dip demand and follow-through buying later sent the pound back up again and cemented its gains for the session, though.
GBP/USD 44 was up by pips (+0.32%) to 1.3993, GBP/JPY 70 was up by pips (+0.47%) to 149.92, GBP/CHF 73 was up by pips (+0.57%) to 1.3078
The higher-yielding Kiwi gave the mighty pound a hard time but eventually lost out when Kiwi bulls began to lose steam and had to content itself with second place.
There weren’t really any apparent catalysts, but it’s likely that the risk-on vibes gave the Kiwi a boost.
Other than that, it’s also possible that we’re seeing some preemptive positioning and/or short-covering since a dairy auction is currently underway.
NZD/USD 7 was up by pips (+0.09%) to 0.7361, NZD/JPY 19 was up by pips (+0.24%) to 78.86, NZD/CHF 23 was up by pips (+0.34%) to 0.6879
The Swissy was the worst-performing currency, likely because of the prevalence of risk-taking during the morning London session. Although SNB meddling is also a usual suspect.
USD/CHF 23 was up by pips (+0.25%) to 0.9345, EUR/CHF 17 was up by pips (+0.14%) to 1.1538, CAD/CHF 17 was up by pips (+0.23%) to 0.7421
Watch Out For:
- 1:30 pm GMT: Canadian wholesale sales (0.4% expected, 0.7% previous)
- 3:00 pm GMT: Euro Zone consumer confidence (1.0 expected, 1.3 previous)
- Dairy auction currently underway (5.9% previous); auction usually ends at around 2:00 pm GMT