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Today’s morning London session was rather subdued. With that said, the Swissy was bid higher across the board as risk aversion returned. The Greenback, meanwhile, got hit by selling pressure and was the worst-performing currency of the session.

Other than those two, the pound is also worth mentioning since the pound was the second best-performing currency after the Swissy, even though there weren’t really any apparent catalysts.

  • Italian trade balance: €3.38B vs. €3.25B expected, €2.99B previous
  • Euro Zone trade balance: €16.9B vs. €17.6B expected, €18.0B previous
  • U.S. retail sales report coming up
  • U.K. Parliamentary debate on Brexit later

Major Events/Reports:

Precious metals rise as other commodities fall

Last week’s commodities rout is not over yet it seems since most commodities were taking hits during the morning London session. Not all commodities were on the receiving end of a beat-down, though, since precious metals were actually doing A-okay.

As to what caused commodities to slide broadly lower, we can’t really point to the Greenback since the Greenback was also taking hits. And for reference, the U.S. dollar index was down by 0.29% to 94.17 for the day by the end of the session.

Anyhow, the broad-based slide in commodities may be due to lingering trade-related concerns. Other than that, market analysts blamed fears that China’s economy may be cooling after disappointing Chinese data were released earlier.

The slide in oil prices, meanwhile, was blamed by market analysts on waning supply-side concerns as Libya reopens its ports, as well as speculation that Russia and other oil producers may raise oil output.

As to why precious metals were doing well enough, we can probably attribute that to the returning risk-off vibes and weaker U.S. dollar.

Base metals got trounced

  • Copper was down by 0.56% to $2.760 per pound
  • Nickel was down by 1.06% to $13,820.00 per dry metric ton

Oil benchmarks also got torpedoed.

  • U.S. WTI crude oil was down by 1.87% to $68.64 per barrel
  • Brent crude oil was down by 2.08% to $73.77 per barrel

As mentioned earlier, precious metals were doing A-okay.

  • Gold was up by 0.31% to $1,245.00 per troy ounce
  • Silver was up by 0.25% to $15.855 per troy ounce

Risk-off start in Europe

The major European equity indices initially followed the Asian bourses by moving broadly higher, which is a sign that risk appetite initially prevailed.

And according to market analysts, the risk-on vibes at the start was due to cautious optimism/speculation that earnings season will be a good one, which was able to offset the jitters due to China’s disappointing data and lingering trade-related fears.

However, it soon became apparent that risk aversion was beginning to win out since the major European equity indices were forced off their highs, with most already in negative territory by the end of the session.

  • The pan-European FTSEurofirst 300 was down by 0.46% to 1,501.17
  • The U.K.’s FTSE 100 was down by 0.91% to 7,592.25
  • Germany’s DAX was down by 0.15% to 12,522.09
  • The blue-chip Euro Stoxx 50 was down by 0.28% to 3,445.75

Major Market Mover(s):

USD

The Greenback took a step back against all its peers and was therefore the worst-performing currency of the session.

Market analysts initially tried to blame the Greenback’s overall weakness on the risk-on vibes, which supposedly boosted demand for higher-yielding currencies/assets/instruments at the expense of the Greenback.

However, risk aversion eventually returned, but the Greenback continued to weaken its peers.

And since the U.S. retail sales report is coming up, and since the Greenback had a good run last week, it’s therefore probable that we’re just seeing some profit-taking ahead of the retail sales report.

USD/JPY was down by 8 pips (-0.07%) to 112.32, USD/CHF was down by 27 pips (-0.28%) to 0.9979, USD/CAD was down by 5 pips (-0.04%) to 1.3138

CHF

The Swissy was the best-performing currency of the morning London session , likely because of the returning risk-off vibes.

EUR/CHF was down by 14 pips (-0.12%) to 1.1691, AUD/CHF was down by 25 pips (-0.34%) to 0.7416, CAD/CHF was down by 18 pips (-0.24%) to 0.7595

GBP

The pound gave a Swissy a good fight but had to content itself with second place (for now).

There were no direct catalysts for the pound’s rise, but some market analysts suggest preemptive positioning ahead of the Parliamentary debate on Brexit.

GBP/USD was up by 25 pips (+0.19%) to 1.3273, GBP/AUD was up by 34 pips (+0.19%) to 1.7858, GBP/CAD was up by 27 pips (+0.16%) to 1.7438

Watch Out For:

  • 12:30 pm GMT: Canadian foreign security purchases ($7.03B expected vs. $9.13B previous)
  • 12:30 pm GMT: Headline (0.5% expected vs. 0.8% previous) and core (0.3% expected vs. 0.9% previous) readings for U.S. retail sales
  • 12:30 pm GMT: Empire State manufacturing index (20.0 expected vs. 25.0 previous)
  • 2:00 pm GMT: U.S. business inventories (0.4% expected vs. 0.3% previous)
  • 4:00 pm GMT: U.K. Parliamentary debate on Brexit is expected to start