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The pound was the worst-performing currency of the session, likely because of Brexit-related uncertainty.

The euro and the Swissy, meanwhile, were the main winners. And between the two, it was the Swissy that came out on top.

  • Swiss jobless rate: 2.6% as expected vs. 2.7% previous
  • German factory orders m/m: -2.5% vs. 0.8% expected, -1.1% previous
  • French trade balance: -€5.0B vs. -€5.1B expected, -€5.0B previous
  • Swiss foreign currency reserves: CHF 741B vs. CHF 757B previous
  • U.K. Halifax HPI m/m: 1.5% vs. 1.0% expected, -3.1% previous
  • Italian retail sales m/m: -0.7% vs. 0.2% expected, -0.2% previous
  • Euro Zone revised Q1 GDP q/q: unchanged at 0.4% as expected
  • Euro Zone revised Q1 GDP y/y: unchanged at 2.5% as expected

Major Events/Reports:

Brexit-related drama

Brexit has come back to the forefront because of the issue surrounding the customs backstop ahead next week’s vote on Theresa May’s Brexit blueprint.

Well, we got more of that today. And bearish pressure on the pound was likely triggered when BBC political editor Laura Kuenssberg cited former Brexit Minister David Jones as saying the following (via a tweet):

More GBP bears came out to play when Brexit Secretary David Davis and British PM Theresa May sat down to try and have a meeting of the minds.

Sadly, even more GBP bears jumped out of the bushes when word got around that the two weren’t able to resolve the issue.

On a more upbeat note, there were rumors yesterday that David Davis may resign because his views aren’t in-line with the PM. However, word got out earlier today that David Davis won’t be going away.

There were also rumors that Theresa May finally caved in and agreed to amending the back stop, but we have yet to see the actual document.

Commodities recover

Commodities were broadly in recovery mode during the morning London session, likely because of the Greenback’s overall weakness.

And for reference, the U.S. dollar index was down by 0.36% to 93.27 when the session came to end.

Other than that, market analysts also said that oil prices climbed higher because of supply concerns because of troubles in Venezuela.

Precious metals were in the green.

  • Gold was up by 0.08% to $1,302.40 per troy ounce
  • Silver was up by 0.43% to $16.765 per troy ounce

Oil benchmarks also got a bullish boost.

  • U.S. WTI crude oil was up by 0.97% to $65.36 per barrel
  • Brent crude oil was up by 1.29% to $76.33 per barrel

Base metals were also mostly in positive territory.

  • Copper was up by 0.46% to $3.277 per pound
  • Nickel was up by 0.93% to $15,780.00 per dry metric ton

Fading appetite for risk

The major European equity indices opened firmer and then proceeded to climb higher, which is a sign of risk-taking.

However, selling pressure eventually returned and forced the major European equity indices to start giving back some of their gains, which implies that appetite for risk was beginning to fade.

Market analysts say that the early risk-on vibes were due to steady demand for tech shares and a strong demand from the banking sector, thanks to speculation that the ECB would be announcing an end to its QE program during next week’s ECB statement.

As to why risk appetite began to fade as the session progressed, market analysts blamed that on the stronger euro since a stronger euro means that European exporters would become less competitive.

  • The pan-European FTSEurofirst 300 was still up by 0.01% to 1,512.22 but off the day’s high at 1,520.37
  • Germany’s DAX was still up by 0.07% to 12,839.31 but off the day’s high at 12,916.80
  • The blue-chip Euro Stoxx 50 was still up by 0.25% to 3,468.85 but off the day’s high at 3,490.05

Major Market Mover(s):

GBP

Brexit-related uncertainty enticed GBP bears to come out of the woodworks.

GBP/USD was down by 45 pips (-0.34%) to 1.3397, GBP/CHF was down by 81 pips (-0.62%) to 1.3149, GBP/AUD was down by 74 pips (-0.42%) to 1.7499

EUR

The euro was the second strongest currency of the session. And market analysts are still attributing the euro’s strength to growing expectations that the ECB may announce an end to its QE program, thanks to hawkish rhetoric from ECB officials.

EUR/USD was up by 20 pips (+0.18%) to 1.1829, EUR/NZD was up by 39 pips (+0.24%) to 1.6791, EUR/GBP was up by 49 pips (+0.56%) to 0.8829

CHF

The Swissy managed to outpace the euro during the session, likely because of fading appetite for risk in Europe, as well as safe-haven demand for the Swissy due to Brexit-related uncertainty.

USD/CHF was down by 29 pips (-0.30%) to 0.9815, EUR/CHF was down by 14 pips (-0.12%) to 1.1611, NZD/CHF was down by 25 pips (-0.36%) to 0.6914

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (221K expected vs. 221K previous)
  • 2:30 pm GMT: BOC’s financial system review will be released
  • 3:00 pm GMT: BOE MPC Member Ramsden will speak
  • 3:15 pm GMT: BOC Guv’nah Stephen Poloz has a presser
  • 7:00 pm GMT: U.S. consumer credit ($14.0B expected vs. $11.6B previous)