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Trading conditions were relatively subdued during the morning London session, likely because there were no major catalysts during the session.

There were some notable themes, though, namely the Greenback’s recovery, the yen rally losing momentum, and the Aussie’s ongoing trip to the downside.

  • SNB sight deposits: CHF 576,377M vs. CHF 576,063M previous

Major Events/Reports:

Geng Shuang speaks

Chinese foreign ministry spokesman Geng Shuang gave a presser earlier. And journalists naturally pounced on the opportunity to ask him about Trump’s recent comments.

With regard to Trump’s threat to impose tariffs on all Chinese goods, Geng Shunag merely reiterated China’s official position that China doesn’t want a trade war, but is ready and willing to fight “when necessary,” adding that China advises “the U.S side to remain calm and maintain a rational attitude.”

As for Trump and Mnuchin’s comments about China’s currency and jabs at China’s alleged currency manipulation, Geng Shuang simply said that:

“China has no intention to use means like the competitive devaluation of its currency to stimulate exports.”

Geng Shuang also said that:

“[T]he RMB exchange rate is mainly determined by the market supply and demand. At present, China’s economic fundamentals continue to improve, providing strong support for the RMB exchange rate to remain basically stable.”

Precious metals fall as other commodities climb

Commodities were broadly on the rise during the morning London session. Not all commodities were in positive territory, though, since precious metals were mostly in the red.

There was no clear catalysts for the broad-based commodities rise, but some market analysts attributed the jump in oil prices to potential supply disruptions as tensions between the U.S. and Iran rose, as well as actual supply disruptions due to an ongoing workers’ strike in the British North Sea.

As to why precious metals were on the defensive, despite the risk-off vibes, market analysts blamed that on the Greenback’s recovery.

Base metals were in the green.

  • Copper was up by 0.62% to $2.773 per pound
  • Nickel was up by 0.24% to $13,545.00 per dry metric ton

Oil benchmarks clearly outperformed.

  • U.S. WTI crude oil was up by 1.08% to $69.00 per barrel
  • Brent crude oil was up by 1.37% to $74.08 per barrel

As mentioned earlier, precious metals didn’t do too well, despite the risk-off vibes in Europe.

  • Gold was up down 0.11% to $1,229.70 per troy ounce
  • Silver was down by 0.28% to $15.505 per troy ounce

Risk-off start in Europe

Europe is apparently starting the new trading week on a gloomy note since the major European equity indices were mostly in the red during the session.

And market analysts say that the risk-off vibes were carried over from last Friday, with Trump’s threat to impose tariffs on all $500+ billion worth of Chinese goods being cited as the main reason for the jitters in Europe.

  • The pan-European FTSEurofirst 300 was down by 0.32% to 1,506.03
  • Germany’s DAX was down by 0.39% to 12,511.85
  • The blue-chip Euro Stoxx 50 was down by 0.57% to 3,444.35

U.S. equity futures were also feeling the heat.

  • S&P 500 futures were down by 0.07% to 2,799.00
  • Nasdaq futures were down by 0.38% to 7,333.00

Major Market Mover(s):

AUD

The Aussie extended its slide and was the worst-performing currency of the morning London session, as well as the weakest currency of the day (so far).

There were no direct catalysts for the Aussie’s continued weakness, but it’s likely that the Aussie is getting hit by sellers because of the risk-off vibes and the Greenback’s recovery, as well faltering gold prices.

AUD/USD was down by 11 pips (-0.15%) to 0.7407, AUD/CAD was down by 16 pips (-0.17%) to 0.9729, AUD/NZD was down by 15 pips (-0.14%) to 1.0871

USD

After a bout of weakness during the earlier session, the Greenback was able to stage a broad-based recovery during the morning London session and was even the second best-performing currency of the session (for what that’s worth).

There was no clear reason for the Greenback’s recovery, though. And market analysts were only stating the obvious when they noted that the Greenback was in recovery mode.

EUR/USD was down by 15 pips (-0.13%) to 1.1716, GBP/USD was down by 8 pips (-0.06%) to 1.3142, NZD/USD was down by 4 pips (-0.06%) to 0.6813

JPY

The yen’s rally faltered during the morning London session, even though risk aversion was the dominant sentiment in Europe. In fact, the yen was even the second weakest currency of the session. Aside from profit-taking and higher bond yields, there’s no clear reason for the yen’s rally to stall, however.

USD/JPY was up by 8 pips (+0.07%) to 111.10, GBP/JPY was up by 14 pips (+0.10%) to 1456.98, NZD/JPY was up by 7 pips (+0.10%) to 75.67

CHF

With the yen out of commission, it was the Swissy that ended up as the safe-haven currency of choice and the top-performing currency of the session.

USD/CHF was down by 5 pips (-0.05%) to 0.9912, EUR/CHF was down by 10 pips (-0.09%) to 1.1612, AUD/CHF was down by 12 pips (-0.16%) to 0.7343

Watch Out For:

  • 12:30 pm GMT: Canadian wholesale sales (0.7% expected vs. 0.1% previous)
  • 2:00 pm GMT: U.S. existing home sales (5.45M expected vs. 5.43M previous)
  • 2:00 pm GMT: Euro Zone consumer confidence (-0.7 expected vs. -0.5 previous)
  • 2:30 pm GMT: CB’s Australian leading index (0.1% previous)
  • 5:00 pm GMT: BOE Deputy Guv’nah Ben Broadbent is scheduled to speak