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The Greenback crushed all opposition during the morning London session, as renewed trade war concerns sent investors scurrying towards the Greenback for protection.

The risk-off vibes, a stronger Greenback, and sliding commodity prices, meanwhile, continued to take their toll on the higher-yielding Kiwi and Aussie.

And as weird as it sounds, the safe-haven Swissy was also taking hits from its peers. In fact, the Swissy barely lost out to the Aussie and was therefore the second worst-performing currency of the session after the Kiwi.

As for the other currencies, the Loonie was the second top-performing currency of the session despite the slide in oil prices. There’s no clear reason why, but it’s possible that we’re just seeing some preemptive positioning ahead of the BOC statement.

The pound was also a net winner. There were no apparent catalysts but some market analysts suggested relief buying since Theresa May’s position as British PM seems safe (for now), as well as preemptive positioning ahead of BOE Guv’nah’s speech for later.

As for the yen and the euro, they had a mixed performance during the session.

  • No major economic reports were released during the session
  • BOC statement and presser later
  • BOE Guv’nah Carney will be speaking later

Major Events/Reports:

Commodities crushed

Almost all commodities were bleeding out during the morning London session, but base metals took a really severe beating.

The broad-based commodities retreat was likely due to the Greenback’s strength. In fact, market analysts were blaming the Greenback’s strength for the poor performance of precious metals, since precious metals usually shine during periods of uncertainty, but they also got a beating today.

And for reference, the U.S. dollar index was up by 0.33% to 94.16 for the day by the end of the session. The Greenback also happens to be the top-performing currency of the morning London session and of the day (so far) as well.

As to why base metals were extra weak, market analysts say that was due to the renewed trade concerns, since the trade war between the U.S. and China will likely weaken Chinese demand for industrial metals.

The risk-off vibes couldn’t provide any support for precious metals.

  • Gold was down by 0.43% to $1,250.00 per troy ounce
  • Silver was down by 0.85% to $15.950 per troy ounce

Base metals were down and out for the count.

  • Copper was down by 2.98% to $2.755 per pound
  • Nickel was down by 3.24% to $13,727.50 per dry metric ton

Oil benchmarks were also sinking.

  • U.S. WTI crude oil was up by 0.82% to $73.50 per barrel
  • Brent crude oil was up by 2.14% to $77.17 per barrel

Risk aversion finally strikes back

After several days of risk-taking, Europe finally experienced a day of very intense risk aversion that caused the major European equity indices to open lower and then proceed to plumb fresh intraday lows as the session progressed.

And according to market analysts, risk aversion made a strong comeback because trade concerns got reignited after the U.S. announced yesterday that it will impose 10% tariffs on an additional $200 billion worth of Chinese goods.

  • The pan-European FTSEurofirst 300 was down by 1.20% to 1,494.92
  • Germany’s DAX was down by 1.41% to 12,433.65
  • The blue-chip Euro Stoxx 50 was down by 1.18% to 3,432.35

U.S. equity futures were also bleeding out, so the intense risk-off vibes will likely persist into the upcoming U.S. session.

  • S&P 500 futures were down by 0.80% to 2,774.50
  • Nasdaq futures were down by 0.99% to 7,229.50

Major Market Mover(s):

USD

The Greenback easily dominated its peers and was the one currency to rule them all during the morning London session. Not only that, the Greenback is also currently the top-performing currency of the day (so far).

There were no direct catalysts for the Greenback’s strength, but some market analysts were saying that the Greenback is now the safe-haven currency of choice.

That’s not a new narrative, I suppose. After all, some market analysts have been saying for a while now that a trade war will likely hurt U.S. partners (rivals?) more than the U.S. itself, which makes the Greenback a prime currency to buy as trade tensions rise.

USD/JPY was up by 24 pips (+0.22%) to 111.22, USD/CHF was up by 31 pips (+0.31%) to 0.9943, USD/CAD was up by 10 pips (+0.08%) to 1.3146

NZD & AUD

The intense risk-off vibes, the Greenback’s crushing advance, and the commodities retreat meant that the higher-yielding Aussie and Kiwi had another rough time, extending their losses from the earlier session.

And between the two of them, it was the Kiwi that had it worse during the session. Although it’s worth noting that the Aussie is still the worst-performing currency of the day (so far).

AUD/USD was down by 19 pips (-0.26%) to 0.7391, AUD/JPY was down by 9 pips (-0.11%) to 82.20, AUD/CAD was down by 20 pips (-0.21%) to 0.9715

NZD/USD was down by 25 pips (-0.37%) to 0.6788, NZD/JPY was down by 12 pips (-0.16%) to 75.50, NZD/CAD was down by 27 pips (-0.31%) to 0.8924

CHF

Risk aversion very clearly prevailed in Europe. And since the Swissy is a safe-haven currency, that means that Swissy should gain strength, right?

Nope! Not only did the Swissy not gain strength, the Swissy also happens to be the second worst-performing currency of the morning London session.

Yeah, you read that right. The safe-haven Swissy lost out to the higher-yielding Aussie and even almost lost out against the Kiwi in a risk averse environment. If you don’t believe me, then go ahead and check out your own charts.

Anyhow, there was no clear reason why, but I have a sneaking suspicion that the SNB was weakening the Swissy again.

GBP/CHF was up by 23 pips (+0.18%) to 1.3172, EUR/CHF was up by 20 pips (+0.17%) to 1.1647, CAD/CHF was up by 19 pips (+0.25%) to 0.7563

Watch Out For:

  • 12:15 pm GMT: Headline (0.2% expected vs. 0.5% previous) and core (0.2% expected vs. 0.3% previous) readings for U.S. PPI
  • 2:00 pm GMT: U.S. final wholesale inventories (0.5% expected, same as previous)
  • 2:00 pm GMT: BOC monetary policy decision (Overnight rate expected to be raised from 1.25% to 1.50%); read Forex Gump’s Event Preview
  • 2:00 pm GMT: BOC monetary policy report will be released
  • 2:30 pm GMT: U.S. crude oil inventories (-4.1M expected, 1.2M previous)
  • 3:15 pm GMT: BOC presser
  • 3:35 pm GMT: BOE Guv’nah Mark Carney is scheduled to give a speech
  • 4:30 pm GMT: Atlanta Fed President Raphael Bostic will speak
  • 8:30 pm GMT: New York Fed President John Williams has a speech