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Today’s morning London session was a bit light in terms of market-moving news or economic reports. Even so, there was some action to be had since the pound found sellers right from the get-go, while the Greenback caught a bid late into the session.

  • German factory orders m/m: -4.0% vs. -0.1% expected, 2.6% previous
  • Sentix Euro Zone investor confidence: 14.7 vs. 14.0 expected, 12.1 previous

Major Events/Reports:

Theresa May’s message

James Slack, British PM Theresa May’s spokesman, got some press time earlier. And he took the opportunity to deliver Theresa May’s message, namely that:

“We continue to believe that a deal is the most likely outcome because reaching a good deal is not only in the interests of the UK, it is in the interests of the EU and its 27 members.”

That statement is in connection to (and a rebuttal of) British International Trade Secretary Liam Fox’s comment over the weekend that he (Fox) thinks that “the intransigence of the [European] commission is pushing us towards no deal,” adding that he sees a “60-40” chance of a “no deal” Brexit scenario.

Oil rises as other commodities fall

Most commodities were on the back foot during the morning London sesion. However, not all commodities were sinking into negative territory since oil benchmarks were actually doing A-okay.

The broad-based commodities slide was likely due to the Greenback’s overall strength. And for reference, the U.S. dollar index was up by 0.33% to 95.34 for the day by the end of the morning London session. And as noted in the introduction, the Greenback was also the top-performing currency of the session.

Other than Greenback strength, some market analysts also say that trade-related jitters were weighing down on base metals such as copper.

As to why oil was in strong demand, market analysts attributed that to the unexpected news that Saudi oil output fell in July, as well as speculation due to an expected announcement from the U.S. later on sanctions against Iran.

Base metals got a beating.

  • Copper was down by 1.97% to $2.709 per pound
  • Nickel was down by 1.44% to $13,320.00 per dry metric ton

Precious metals were also hammered down.

  • Gold was down by 0.32% to $1,219.30 per troy ounce
  • Silver was down by 0.63% to $15.365 per troy ounce

As mentioned earlier, oil benchmarks were doing A-okay.

  • U.S. WTI crude oil was up by 1.27% to $69.36 per barrel
  • Brent crude oil was up by 0.99% to $73.92 per barrel

Risk-friendly start in Europe

The major European equity indices started the new trading week by sliding broadly lower. However, they later found support and began to turn higher. Most were even already well in the green by the end of the session, which is a sign that risk-taking was the dominant sentiment in Europe.

And according to market analysts, the risk-off vibes at the start were due to lingering-trade related worries because of the ongoing trade war between the U.S. and China.

As for the later recovery in sentiment, market analysts attributed that to cautious optimism that this week’s earnings reports will be good, which were able to overpower any trade-related jitters (for now).

  • The pan-European FTSEurofirst 300 was up by 0.21% to 1,527.09
  • Germany’s DAX was up by 0.66% to 12,700.36
  • The blue-chip Euro Stoxx 50 was up by 0.42% to 3,500.05

U.S. equity futures were also in the red earlier, but were able to pull up and are now in the green, which implies that the risk-on vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were up by 0.11% to 2,842.75
  • Nasdaq futures were up by 0.19% to 7,416.00

Major Market Mover(s):

USD

The Greenback was the top-performing currency of the morning London session, thanks to an influx of late buyers.

There was no clear trigger for the buying pressure, but some market analysts pointed to safe-haven flows because of linger trade-related jitters.

USD/JPY was up by 17 pips (+0.15%) to 111.47, USD/CHF was up by 21 pips (+0.21%) to 0.9974, USD/CAD was up by 15 pips (+0.12%) to 1.3018

GBP

The pound was swamped by sellers when the morning London session rolled around and was the worst-performing currency of the session. The pound also happens to be the weakest currency of the day (so far).

We’re probably seeing an extension of last week’s slide in the wake of BOE Guv’nah Carney’s comments, but some market analysts also pointed to Liam Fox’s Brexit-related comments, which I already alluded to earlier.

It’s all the same, really, since Carney was also talking about Brexit last week. Well, that and a slower pace of tightening.

GBP/USD was down by 63 pips (-0.49%) to 1.2932, GBP/CAD was down by 64 pips (-0.38%) to 1.6836, GBP/NZD was down by 64 pips (-0.33%) to 1.9213

Watch Out For:

  • Civic Day holiday in Canada today