Greenback domination and Swissy weakness were the main themes during today’s morning London session.
Euro weakness was also a notable theme. The Swissy was much weaker, though, and I can’t believe I’m typing this, but it seems that the Swissy got swamped by sellers after Switzerland’s CPI failed to meet expectations.
- May Day holiday in the U.K. today
- German factory orders m/m: -0.9% vs. 0.5% expected, -0.2% previous
- Swiss CPI m/m: 0.2% vs. 0.3% expected, 0.4% previous
- Swiss CPI y/y: 0.8% vs. 0.9% expected, 0.8% previous
- Euro Zone retail PMI: 48.6 vs. 50.1 previous
- Euro Zone Sentix investor confidence: 19.2 vs. 22.4 expected, 19.6 previous
Swiss CPI disappoints
Switzerland released its April CPI report earlier, revealing that headline CPI only increased by 0.2% month-on-month.
This is slower than the +0.4% recorded in March is a weaker reading compared to the consensus for a 0.3% monthly rise.
Looking at the details of the report, the 0.1% decrease in the price of food and non-alcoholic beverages and healthcare were the major drags. Although the much slower increase in the cost of clothing and footwear (+1.2% vs. +5.2% previous) also acted as a drag.
Oil climbs as other commodities fall
Commodity prices were broadly in retreat during the morning London session.
Not all commodities were in decline, though, since oil benchmarks were broadly higher for the session (and for the day for that matter).
Anyhow, the slide in commodity prices was likely due to the Greenback’s strength, which makes globally-traded commodities relatively more expensive.
And for reference, the U.S. dollar index is up by 0.39% to 92.78 for the day when the morning London session ended.
As for the rise in oil prices, market analysts were attributing that to the problems in Venezuela and the possibility that Trump may reimpose sanctions against Iran.
Precious metals were leaking red.
- Gold was down by 0.25% to $1,311.40 per troy ounce
- Silver was down by 0.21% to $16.485 per troy ounce
Base metals were actually mixed, but many were in the red.
- Copper was down by 0.57% to $3.068 per pound
- Tin was down by 0.21% to $21,217.50 per dry metric ton
As mentioned earlier, oil benchmarks were well in the green.
- U.S. WTI crude oil was up by 1.21% to $70.56 per barrel
- Brent crude oil was up by 1.04% to $75.65 per barrel
Risk-friendly start in Europe
The major European equity indices started the new trading week on a mixed note.
However, a wave of optimism was apparently sweeping across Europe since the major European equity indices were broadly in the green by the end of the morning London session.
And according to market analysts, the risk-on vibes in Europe was due to positive earnings reports. Although deal-making activity was also cited, particularly the licensing agreement granted by Starbucks to Swiss-based Nestle.
Another reason cited by other market analysts was the rise in oil prices since that supposedly ramped up demand for energy shares.
- The pan-European FTSEurofirst 300 was up by 0.27% to 1,522.75
- Germany’s DAX was up by 0.58% to 12,894.20
- The blue-chip Euro Stoxx 50 was up by 0.16% to 3,552.95
The risk-on vibes in Europe also gave U.S. equity futures a boost.
- S&P 500 futures were up by 0.32% to 2,671.50
- Nasdaq futures were up by 0.56% to 6,812.75
Major Market Mover(s):
After a mixed start during the earlier Asian session, the Greenback powered higher against its peers during the morning London session and was the top-performing currency of the session.
In fact, the Greenback is also now the best-performing currency of the day (so far).
There were no apparent catalysts for the Greenback’s strength, however. And market analysts were only stating the obvious that the Greenback’s broad-based rally is still intact.
GBP/USD was down by 32 pips (-0.24%) to 1.3519, NZD/USD was down by 17 pips (-0.24%) to 0.6996, AUD/USD was down by 22 pips (-0.29%) to 0.7494
The Swissy was the worst-performing currency of the session. And I can’t believe I’m typing this, but it seems that the Swissy got swamped by sellers after Switzerland’s CPI failed to meet expectations, which is kinda weird since the Swissy doesn’t usually react to economic data.
But then again, that may have just been a coincidence (or the SNB sneakily weakening the Swissy again). After all, risk-taking was the name of the game in Europe and the risk-on vibes mean weaker demand for the safe-haven Swissy.
USD/CHF was up by 42 pips (+0.43%) to 1.0054, EUR/CHF was up by 15 pips (+0.13%) to 1.1966, GBP/CHF was up by 35 pips (+0.26%) to 1.3593
The euro has been showing weakness since the earlier Asian session, and the euro only extended that theme during the morning London session.
The euro appears to be tracking the slide in European bond yields. And European bond yields were down, in turn, because of the poor mid-tier and low-tier data released during the session, market analysts say.
EUR/USD was down by 38 pips (-0.31%) to 1.1899, EUR/JPY was down by 22 pips (-0.17%) to 130.14, EUR/GBP was down by 13 pips (-0.15%) to 0.8808
Watch Out For:
- 12:30 pm GMT: Atlanta Fed President Raphael Bostic will give a short speech
- 4:30 pm GMT: ECB Member and Chief Economist Peter Praet will speaj
- 6:00 pm GMT: Richmond Fed President Thomas Barkin will speak
- 7:00 pm GMT: U.S. consumer credit ($16.2B expected vs. $10.6B previous)