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The Greenback staged a broad-based retreat during the morning London session. And that, plus the rise in commodity prices and risk-on vibes, meant a battle for supremacy among the comdolls.

However, the pound later got a bullish boost near the end. And that allowed the pound to claim the top spot and leave the comdolls in the dust.

  • French industrial production m/m: -0.4% vs. 0.4% expected, 1.1% previous
  • French industrial production y/y: 1.8% vs. 2.8% expected, 4.0% previous
  • Italian retail sales m/m: -0.2% vs. 0.1% expected, 0.7% previous
  • RBNZ statement and presser later; read Forex Gump’s Event Preview

Major Events/Reports:

Precious metals fall as other commodities rise

Commodities were broadly in demand during the morning London session, with oil leading the way.

Not all commodities were in green, however, since precious metals were broadly in negative territory, likely because of the risk-on vibes. After all, precious metals are considered as traditional safe-havens.

Anyhow, demand for the other commodities may have been stoked by the Greenback’s retreat during the morning London session.

And for reference, the U.S. dollar index was up already down by 0.15% to 92.80 for the day by the end of the morning London session after reaching an intraday high of 93.26 earlier.

Other than that, market analysts are still pointing to uncertainty surrounding the Iran Deal as also pushing oil prices higher.

Oil benchmarks clearly outperformed.

  • U.S. WTI crude oil was up by 2.56% to $70.83 per barrel
  • Brent crude oil was up by 2.45% to $76.69 per barrel

Base metals were actually mixed but most were raking in gains. And those that were still in the red are already off their lows for the day.

  • Copper was up by 0.10% to $3.062 per pound
  • Nickel was up by 0.28% to $3,087.50 per dry metric ton

Precious metals just couldn’t get a break, likely because of the risk-friendly vibes in Europe.

  • Gold was down by 0.38% to $1,308.70 per troy ounce
  • Silver was down by 0.10% to $16.455 per troy ounce

Risk-taking in Europe

Risk-taking was apparently the name of the game in Europe since the major European equity indices were broadly in the green during today’s morning London session.

And according to market analysts, positive earnings reports and the surge in oil prices were the main reasons for the risk-on vibes in Europe. The latter, in particular, helped to spur demand for energy shares, improving overall risk sentiment in the process.

  • The pan-European FTSEurofirst 300 was up by 0.29% to 1,532.74
  • Germany’s DAX was up by 0.04% to 12,916.55
  • The blue-chip Euro Stoxx 50 was up by 0.25% to 3,565.35

The risk-on vibes in Europe also helped to support U.S. equity futures, signaling that the risk-on vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.40% to 2,681.00
  • Nasdaq futures were down by 0.28% to 6,839.50

Global bond yields jump

Another sign that risk-taking was the name of the game in Europe was the surge in global bond yields.

And aside from risk appetite, market analysts also attributed the rise in bond yields on the surge in oil prices since that will likely help to apply inflationary pressure later.

It’s worth pointing out that U.S. bond yields later came off their highs, though.

  • German 10-year bond yield up by 3.22% to 0.577%
  • French 10-year bond yield up by 1.83% to 0.818%
  • U.K. 10-year bond yield up by 2.49% to 1.481%
  • U.S. 10-year bond yield up by 1.28% to 3.006%
  • Canadian 10-year bond yield up by 1.15% to 2.380%

Major Market Mover(s):

GBP

The pound was mixed for most of the session. However, the pound caught a bid near the end. And that allowed the pound to outpace the comdolls and emerge as the top currency of the morning London session.

Oddly enough, there were no apparent catalysts for the pound’s strength, so market analysts were mostly pointing to technicals.

However, it’s also possible that we’re seeing some short covering and/or preemptive positioning ahead of tomorrow’s BOE Statement.

GBP/USD was up by 88 pips (+0.66%) to 1.3589, GBP/JPY was up by 101 pips (+0.67%) to 149.10, GBP/CHF was up by 60 pips (+0.44%) to 1.3610

USD

The Greenback was the worst-performing currency of the morning London session, even though there were no apparent catalysts.

U.S. bond yields came off their highs near the end of the session, which may have weighed down on USD pairs. However, the Greenback’s slide started before the U.S. bond yields began to ease. And other than profit-taking, there’s really not much else.

EUR/USD was up by 51 pips (+0.43% 1.1879, NZD/USD was up by 31 pips (+0,45%) to) to 0.6985, AUD/USD was up by 39 pips (+0.52%) to 0.7455

Overlay of USD Pairs & US10Y: 15-Minute Chart
Overlay of USD Pairs & US10Y: 15-Minute Chart

Watch Out For:

  • 12:30 pm GMT: Headline (0.2% expected vs. 0.3% previous) and core (0.2% expected vs. 0.3% previous) readings for U.S. PPI
  • 12:30 pm GMT: Canadian building permits (2.2% expected vs. -2.6% previous)
  • 2:00 pm GMT: U.S. final wholesale inventories (0.5% expected, same as previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-0.2M expected vs. 6.2M previous)
  • 9:00 pm GMT: RBNZ monetary policy decision (OCR steady at 1.75% expected); read Forex Gump’s Event Preview
  • 10:00 pm GMT: RBNZ press conference