Today’s morning London session was rather lively, with lots of themes playing out.
Greenback strength was still a major theme, although it’s worth noting that the safe-havens yen and Swissy managed to (barely) overpower the Greenback, likely because of the risk-off vibes in Europe.
Another major theme was comdoll weakness, very likely because commodities were taking a beating during the European session.
- Victory Day holiday in France today
- Swiss jobless rate: 2.7% vs. 2.9% expected, 2.8% previous
- German industrial production m/m: 1.0% vs. 0.9% expected, -1.75 previous
- German trade balance: €22.0B vs. €19.9B expected, €19.4B previous
- Halifax HPI m/m: -3.1% vs. -0.3% expected, 1.6% previous
- NFIB U.S. small business index: 104.8 vs. 104.5 expected, 104.7 previous
- U.S. President Trump will be speaking about the Iran Deal later
Aside from his scheduled speech on the Iran Deal, U.S. President Trump also announced the following via a tweet:
I will be speaking to my friend, President Xi of China, this morning at 8:30. The primary topics will be Trade, where good things will happen, and North Korea, where relationships and trust are building.
— Donald J. Trump (@realDonaldTrump) May 8, 2018
Commodities got a good beating during today’s morning London session. And unlike yesterday, today’s commodities rout was broad-based since even oil benchmarks were taking hits.
The commodities rout was likely due to another bout of Greenback strength. Well, that’s at least the reason cited by market analysts for the slide in some base metals such as copper.
And for reference, the U.S. dollar index was up by 0.33% to 92.92 for the day by the end of the morning London session.
Base metals were mostly in negative territory.
- Copper was down by 1.23% to $3.041 per pound
- Nickel was down by 0.21% to $13,937.50 per dry metric ton
Precious metals were down despite the risk-off vibes in Europe.
- Gold was down by 0.35% to $1,309.50 per troy ounce
- Silver was down by 0.31% to $16.445 per troy ounce
Oil benchmarks were also taking hits.
- U.S. WTI crude oil was down by 1.23% to $69.86 per barrel
- Brent crude oil was down by 0.95% to $75.45 per barrel
Risk-off vibes in Europe
Europe was hit by a wave of risk aversion during today’s morning London session, which caused the major European equity indices to reel in pain.
Market analysts blamed the risk-off vibes in Europe on disappointing earnings reports, as well as political uncertainty in Europe due to inconclusive coalition talks in Italy.
Other than that, I’d add that it’s possible that the risk-off vibes in Europe may have also been due to uncertainty ahead of Trump’s speech on the Iran Deal later.
- The pan-European FTSEurofirst 300 was down by 0.24% to 1,524.01
- Germany’s DAX was down by 0.51% to 12,881.77
- The blue-chip Euro Stoxx 50 was down by 0.57% to 3,545.75
U.S. equity futures were also weighed down by the risk-off vibes in Europe, which implies that the risk aversion may carry over into the upcoming U.S. session.
- S&P 500 futures were down by 0.36% to 2,660.50
- Nasdaq futures were down by 0.41% to 6,798.25
Major Market Mover(s):
JPY & CHF
Both the safe-haven yen and Swissy were able to edge out a win against the mighty Greenback during the morning London session. And Swissy and yen bulls can probably thank the risk-off vibes in Europe for that.
USD/CHF was down by 3 pips (-0.04%) to 1.0026, EUR/CHF was down by 49 pips (-0.41%) to 1.1906, GBP/CHF was down by 72 pips (-0.53%) to 1.3545
USD/JPY was down by 2 pips (-0.02%) to 108.99, EUR/JPY was down by 47 pips (-0.36%) to 129.40, GBP/JPY was down by 72 pips (-0.49%) to 147.22
AUD & NZD
All the comdolls (CAD, NZD, AUD) were losers during the morning London session, likely because of the commodities rout.
However, the higher-yielding Aussie and Kiwi were particularly weak, probably because Greenback strength and the risk-off vibes in Europe.
NZD/USD was down by 45 pips (-0.65%) to 0.6975, NZD/CHF was down by 48 pips (-0.68%) to 0.6994, NZD/JPY was down by 49 pips (-0.65%) to 76.03
AUD/USD was down by 53 pips (-0.71%) to 0.7455, AUD/JPY was down by 58 pips (-0.71%) to 81.25, AUD/CHF was down by 55 pips (-0.73%) to 0.7476
Watch Out For:
- 12:15 pm GMT: Canadian housing starts (218K expected, 225K previous)
- 2:00 pm GMT: JOLTS U.S. job openings (6.02M expected, 6.05M previous)
- 6:00 pm GMT: U.S. President Trump expected to speak about the Iran Deal